Oral Answers to Questions

WALES

The Secretary of State was asked—

Antisocial Behaviour

Martyn Jones: What assessment he has made of the impact of measures to tackle antisocial behaviour in Wales.

Peter Hain: Before I answer my hon. Friend's question, I am sure that the House will join me in remembering the 144 people, including 116 children, who lost their lives in the horrific Aberfan disaster 40 years ago this Saturday. Our thoughts will be with the relatives, the survivors, and indeed the whole community on this difficult occasion.
	We take the problem of antisocial behaviour more seriously than any previous Government. The tough measures that we have introduced are stamping out this blight on our communities.

Martyn Jones: Antisocial behaviour has reduced in my constituency, but there are problems with local authorities not using the powers we have given them. The police have powers, but will my right hon. Friend use his influence to ensure that local authorities in Wales use the powers we have given them—for example, the provision of alley gates—to reduce antisocial behaviour,?

Peter Hain: I agree that the antisocial behaviour legislation is not being applied with the vigour that we expect right across Wales, and it should be, both by the police, but particularly by local authorities, as my hon. Friend says. I saw a very good example of it being applied when I visited Llandudno Junction the other Friday, where a crack house has been closed down. While it was operating it was causing absolute devastation, blight and misery to neighbours in the area, many of whom were thinking of leaving their homes because they could not go out at night, their cars were being vandalised and their children were being threatened. That sort of thing must stop and we expect everybody to clamp down on it, as North Wales police and local councillors did so successfully there.

Roger Williams: The Secretary of State will be aware of the success of community support officers as the visible sign of authority in some communities. Will he make representations to the Home Office and to the Assembly to ensure that there is a roll out of community support officers, who have been so successful in Llandrindod Wells in tackling this terrible problem but do not yet operate in Ystradgynlais, from where I receive a continuous stream of complaints about the quality of life being disrupted by antisocial behaviour?

Peter Hain: I very much agree with the hon. Gentleman on the importance of community support officers. That is why we have recruited 271 in Wales alone over the past few years, rising to 740 by next April and to 1,100 the year after, so a tremendous stream of important community support is becoming available. I hope that the Liberal Democrats will not only back the Government on the issue, but support us on antisocial behaviour measures, which they have voted against every time they have been brought before the House. They say a different thing locally, but we are used to that with the Liberal Democrats, are we not?

Hywel Francis: Does my right hon. Friend agree that one of the best ways of countering antisocial behaviour is to celebrate the achievements of young people? Yesterday, I was at the Royal Albert hall where three of my young constituents, Leah Young, James Taylor and Anthony Llewellyn of Glanafan comprehensive school, were finalists in the Young Brits at Art awards. Will my right hon. Friend join me in congratulating them and their excellent school on this achievement, and the Commission for Racial Equality on this fine initiative, which will help to build social cohesion and citizenship in our communities?

Peter Hain: I join my hon. Friend in congratulating Glanafan school, which is indeed a fine school, among many others across Wales under our Labour Government, and the Commission for Racial Equality on this important initiative. Antisocial behaviour involves a tiny minority of young people. They are incredibly disruptive and they have to be dealt with, but the great majority of young people in Wales make us proud.

David Jones: As you can see, Mr. Speaker, I am here in the absence of my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan), who unfortunately is ill and in hospital. However, I am glad to say that I have spoken to her today; she is on the mend and she hopes to be here this time next month.
	The Secretary of State will be aware that the probation service is one of the many agencies involved in dealing with antisocial behaviour and its associated crimes. Does he agree that since such offences are of an inherently localised nature, it is important that the probation service in Wales should continue to be organised on a localised basis? Will he resist proposals that might result in the administration of the service being organised from across the English border?

Peter Hain: I welcome the hon. Gentleman to the Dispatch Box and express my sympathy for the hon. Lady. I phoned her yesterday to speak to her in hospital, and I, along with all hon. Members, wish her all the best.
	On probation officers, we must ensure that we get the changes right, and we will do so. On antisocial behaviour, which is the subject of the question, the Conservatives voted against our policies to crack down on disorderly drinking and to introduce new powers for local authorities.

Aid to Africa

Julie Morgan: What discussions he has had with the Secretary of State for International Development on co-operation with the Welsh Assembly Government on aid to Africa.

Nick Ainger: My right hon. Friend the Secretary of State and I are pleased to have regular discussions with ministerial colleagues on a range of issues, including co-operation with the Welsh Assembly Government.

Julie Morgan: My hon. Friend is well aware of the strong links between Wales and Africa, particularly among schools, hospitals and voluntary bodies. In my constituency, there are links between Cathays high school and Lesotho and Whitchurch high school and South Africa. Does my hon. Friend agree that such links contribute greatly to the professional development of teachers, broaden children's horizons and benefit everybody involved?

Nick Ainger: Yes, I do. The Welsh Assembly Government launched their international sustainable development framework two weeks ago, and the launch was attended by my right hon. Friend the Secretary of State for International Development, who said that UK aid now helps to lift more than 5,000 people a day out of poverty. My right hon. Friend also welcomed the Welsh Assembly Government's announcement that they are strengthening their contribution to reducing poverty in Africa by providing support in humanitarian emergencies and by encouraging the exchange of skills between hospitals and schools, to which my hon. Friend has referred, in Wales and Africa—an initiative that makes a real difference to the lives of poor families. It is worth noting that by next year the UK aid budget will have tripled. We have led the campaign across the world on debt relief and debt cancellation, and this is part of that package. That contrasts greatly with the cuts made by the Conservative Government in their 18 years in power, when they effectively halved the aid budget in real terms.

Manufacturing

Adam Price: What change there has been in the number of manufacturing jobs in Wales since 1997.

Peter Hain: Despite the fact that manufacturing in Wales, as elsewhere, continues to face huge competitive threats from low-cost countries, it accounts for some 20 per cent. of total Welsh economic output, and we continue to attract high-level investment.

Adam Price: Given this Government's appallingly dismal record on defending the Welsh manufacturing sector, including the loss of another 3,000 jobs in the past six months alone, is the Secretary of State concerned to read the report by Morgan Stanley that Tata Steel, which yesterday announced its bid for Corus, plans to shift the production of steel slab from Port Talbot to India with the potential loss of thousands of jobs in south Wales?

Peter Hain: I am astonished that the hon. Gentleman describes our record on the Welsh economy as "dismal", when there are record numbers of jobs and when Welsh manufacturing is doing better than manufacturing elsewhere in the United Kingdom. New companies are coming in—for example, G24 Innovations has announced that it will create 300 jobs in Cardiff through its £60 million investment—and more jobs are being created in high-tech manufacturing all the time. Yes, low-cost manufacturing is disappearing to low-cost countries. Tata Steel is a huge Indian conglomerate, and the implications of its bid are not clear. I understand that it wants to invest in steel in the United Kingdom and to take advantage of the enormous growth in India by producing steel, including in Wales.

Mark Tami: May I draw my right hon. Friend's attention to early-day motion 2775, which has been signed by many Labour Members and which acknowledges the importance of Airbus to the UK economy? Airbus provides high quality employment in Wales: will my right hon. Friend work with Department of Trade and Industry Ministers to ensure that the next generation of composite wings are designed and built in the UK and not in Germany or Spain?

Peter Hain: We will work tirelessly with my hon. Friend to ensure that that is achieved. I am sure that the whole House will join me in paying tribute to his continued work and effort on behalf of Airbus, which is an excellent company that has a site at Broughton in his constituency. There are now 20,000 highly skilled jobs in the aerospace industry in Wales. They contribute £1 billion to the Welsh economy, the great bulk of which comes from Airbus at Broughton. The Prime Minister has visited Broughton, and we will continue to support Airbus.

Lembit �pik: Does the Secretary of State agree that Wales could lead the world in environmentally sustainable manufacturing jobs through technologies such as geothermal, wind, tidal, hydrogen and solar power? Does he join me in applauding firms such as Dulas in Machynlleth and G24 Innovations, which he mentioned, in Cardiff, which will lead the way in clean energy for homes and businesses? Will he agree to meet a cross-sector delegation to hear manufacturers' proposals for an eco-strategy to make Wales a global leader in green and renewable technologies?

Peter Hain: I, or my hon. Friend the Under-Secretary, will certainly be pleased to receive a delegation, because this is a vital subject. My hon. Friend visited Dulas and was hugely impressed with the company. I completely agree with the hon. Gentleman, as does Andrew Davies, the Minister with responsibility for economic development. Wales is a centre of clean, green energy production, as well as use.

Nia Griffith: I very much welcome the creation of 300 jobs near Cardiff in a very exciting new solar energy product, but what discussions has the Secretary of State had with colleagues in the Welsh Assembly Government about the use of initiatives such as Technium in Llanelli to ensure that investment in quality jobs reaches west Wales?

Peter Hain: It is imperative that the enormous growth and prosperity that has been generated in south-east Wales, especially in Cardiff and Newport, spreads westward, including to Neath, but not least to Llanelli. There have been big examples of that happening recently. The Technium innovation is hugely successful in Swansea, and it will be in Llanelli, too, with the Government's support.

Nigel Evans: The Secretary of State says that we should be happy about the fact that there is a higher percentage of manufacturing jobs in Wales than in the rest of the UK, yet that has always been the case, although the percentage was a lot higher nine years ago than it is today. How many more manufacturing jobs are going to be lost in Wales before the Government finally get a strategy to protect them?

Peter Hain: The fact that high-tech manufacturing jobs are coming in, and the fact that companies I have visited such as Sharp in Wrexham and International Rectifier in Newport are investing more and have high-quality, long-term jobs, shows that there is an enormous strength in manufacturing. It is a bit rich for the hon. Gentleman to complain about changes in manufacturing jobs given that 100,000 of them were murdered under the Conservative Government whom he supported.

John Smith: It goes without saying that a strong, modern manufacturing industry in Wales requires a high-quality skills base. What progress is my right hon. Friend making in bringing the defence training academya skills training academyto St. Athan in the Vale of Glamorgan?

Peter Hain: The Government expect to make an announcement on that in the near future. St. Athan's proposal for a world-class, state-of-the-art training centre for the Ministry of Defence has enormous merit, but the MOD must take the decision in the proper way.

David Jones: The Secretary of State will be aware that last July his colleague, the Secretary of State for Trade and Industry, said that on the sale of BAE Systems' interest in Airbus the Government would be given a guarantee that Britain would have a role in future aircraft development. Given that last Friday BAE disposed of its interest in Airbus, can the Secretary of State confirm that under the terms of that guarantee Britain's place in the future of Airbus and the 6,000 jobs at Broughton are secure?

Peter Hain: In fact, there are more high-quality jobs at Broughton. The Broughton centre is the biggest and most successful manufacturing centre anywhere in the European Union, let alone in the United Kingdom. We believe that its future will be secure under a Labour Governmentwho knows what it will be under a Tory Government?

David Jones: The Secretary of State has not replied to my question about the guarantee. Is it not expressly subject to overriding shareholder interest? In those circumstances, what weight can be given to it; and is it not in truth virtually worthless?

Peter Hain: No, I do not accept that. Airbus in Broughton has expanded year after year under our Government. It is a world centre for wing production that cannot be equalled anywhere in the world, including by Boeing in the United States, and its future is secure.

EU Structural Funds

Wayne David: What progress is being made in drawing up plans for the allocation of EU structural funds in west Wales and the valleys.

Peter Hain: The Welsh Assembly Government anticipate reaching agreement on their programmes in early 2007.

Wayne David: I am sure that the Secretary of State agrees that the objective 1 programme for west Wales and the valleys has been successful, drawing praise from the European Commission and others. However, does he also agree that, when we look to the future and the convergence programme, we need a strategic approach to the allocation of funds to have the greatest possible effect?

Peter Hain: I agree. Wales's objective 1 programme has been rated the best in Europe and we need to ensure that it continues to have that effect. It is interesting that increases in earnings and jobs since its operation in west Wales and the valleys are greater than the Welsh and English averages. That is an incredible achievement for areas that suffered such blight and were devastated under the Tories. Objective 1 funding has brought growth, prosperity and hope to west Wales and the valleys.

Mark Williams: May I press the Secretary of State a little more on the timetable for the new round of convergence funding? He knows that the Welsh European Funding Office is currently giving advice to prospective applicants, but cannot give a precise date,
	as this is subject to the negotiation process with the EU Commission in late 2006, which may run into early 2007.
	Does he agree that there is a healthy impatience to get the matter resolved, not least because many projects are waiting in the pipeline? They include the development of renewable energies and energy efficiency, which fulfil some of the Lisbon criteria, and many small-scale community projects that do not. None the less, they all need the green light and cannot wait indefinitely.

Peter Hain: We shall continue to take that forward as effectively as possible. We have shown in the past that we always deliver under objective 1, despite whingeing and sniping by Opposition Members. The Labour Government have delivered in Cardiff and Westminster. The proof is that, whereas the gross value added per head in west Wales and the valleys was falling before 2000 and the objective 1 programme, it now consistently keeps pace with the UK average. That is a genuine tribute to the effectiveness of our policies.

Chris Bryant: Will EU structural funds be used to protect jobs in the Rhondda? Two weeks ago, Burberry announced that it intends to close its factory in Treorchy just after Christmas. Yet only last week, it announced a record increase in retail sales of 27 per cent. in the past few months. Does the Secretary of State worry that British brands, which trade on their Britishness, undermine that brand by outsourcing to other countries and stopping their production in Britain?

Peter Hain: I acknowledge the valiant fight that my hon. Friend, along with Leighton Andrews, Assembly Member for Rhondda, has put up on behalf of the Burberry workers. We shall continue to support their efforts to try to ensure that there is a future for the factory. However, competition and management decisions have clearly affected that. It is therefore important to continue to work together to ascertain what can be done.

Perinatal Care

Michael Fabricant: Pursuant to the answer of 3 May 2006,  Official Report, column 954, on tourist medical facilities, what recent discussions he has had with the Assembly Minister for Health and Social Services on the provision of perinatal care.

Nick Ainger: I have regular meetings with the Assembly Minister for Health and Social Services covering a range of issues.

Michael Fabricant: The Under-Secretary knows that the maternity wards at Llanidloes, Machynlleth, Tywyn, Newtown and Dolgellau are currently mothballed. Does he know that, at Bronglais district general hospital in Aberystwyth, there are moves not to provide 24/7 paediatric consultant cover? If that goes ahead, it means that Welsh babies will be born in Shrewsburywe need Welsh babas to be born in Wales. Will the Under-Secretary therefore give me, the people of mid-Wales and visitors from Lichfield to mid-Wales an assurance that Bronglais will continue with 24/7 cover?

Nick Ainger: As a grandfather for the first time a year and a day ago, I understand the hon. Gentleman's point and appreciate the need for specialist baby care units that are consultant led. A review is taking place and no decisions have yet been made. Indeed, a member of the review team has said that people should not assume that the consultant-led obstetric department will be removed from Bronglais hospital. I hope that that gives the hon. Gentleman and other hon. Members some assurance.

Elfyn Llwyd: I hear what the Minister says about the presumption that the consultant-led service will not, after all, be moved from Aberystwyth. Does he realise, however, how vital that service is to the whole of mid-Wales? Tywyn hospital, for example, utterly depends on that outreach consultancy service. Will the Minister redouble his efforts, together with his colleagues in Cardiff, to ensure that the service continues, in the interest of the whole of mid-Wales, including south Meirionnydd?

Nick Ainger: I appreciate the hon. Gentleman's point that the service covers an area far wider than just Aberystwyth. I recognise personally the importance of having consultant-led specialist baby care units to cover rural areas. We all recognise how difficult it is to provide such services, but the consultant-led service in Aberystwyth covers a very large rural area. I shall make the views of hon. Members on this matter known to Dr. Brian Gibbons.

Police

Shailesh Vara: What recent discussions he has had with the Secretary of State for the Home Department on police performance in Wales.

Peter Hain: Regular ones. Additionally, I recently visited north Wales with my hon. Friend the Minister for Policing.

Shailesh Vara: I am grateful to the Minister for that response. Does he agree, however, that the money wasted on trying to merge the four Welsh police forces would have been better spent trying to recruit more police officers?

Peter Hain: We have recruited 1,000 extra police officers in Wales under our Labour Government; there were cuts in real terms to police resources in Wales when the Conservatives were last in power. It was right that we tried to identify the gap in protective services in Wales and elsewhere in order to fight terrorism, serious organised crime and drug dealing, and I had a very productive meeting with the Welsh police authorities only the other week in north Wales to try to take things further.

Ian Lucas: Community policing in Wrexham has improved markedly as a result of neighbourhood wardens, community support officers and police officers working together. Will my hon. Friend therefore please explain what on earth possessed the Lib Dem-led council in Wrexham to propose the scrapping of neighbourhood wardens? That proposal is being vehemently opposed by my constituents.

Peter Hain: I never know what possesses Lib Dem councils anywhere, including Wrexham. They often cut services, including vital ones such as neighbourhood wardens, and thereby lose the respect that local people might otherwise have had for them. That is why we need a Labour council back in Wrexham as soon as possible.

Prisons

Hywel Williams: What discussions he has had with the Home Secretary on Welsh prisoners on the prison estate.

Nick Ainger: My right hon. Friend and I have regular discussions with ministerial colleagues on all matters that affect Wales, and last week I had a meeting with my hon. Friend the Minister with responsibility for prisons.

Hywel Williams: I thank the Minister for that answer. Before the Welsh Affairs Committee's investigation takes place, will he look into the question of custody for 17 and 18-year-oldsgiven that there are only 36 places for them in Wales, none of which is in mid-Wales or north Walesso that he will be able to respond properly to the Committee's investigation later in the Session?

Nick Ainger: I had some difficulty hearing what the hon. Gentleman was saying, but I understand that he was expressing concern about young people in prison. That is an issue that needs to be addressed, and I am sure that my right hon. Friend the Home Secretary was listening to his question. I know that the hon. Gentleman has raised the issue of the prison estate before and asked whether it would be possible to establish a prison in north Wales. Following my discussions with the Minister with responsibility for prisons, I can tell the hon. Gentleman that, if a suitable site can be identified in north Wales, the Home Office will give the matter very serious consideration. Perhaps he would like to contact the Minister directly if he has any sites to promote.

Madeleine Moon: Will the Minister join me in congratulating the Parc Supporting Family Forum, which works with prisoners in Parc prison in my constituency to roll out programmes to prevent reoffending and to ensure that family links with prisoners are maintained? Will he also urge Bridgend county borough council

Mr. Speaker: Order. One supplementary question is fine.

Nick Ainger: I congratulate the organisation that is working so hard in my hon. Friend's constituency. It is accepted that we need to maintain family links for prisoners, so that they improve their opportunities for rehabilitation and we prevent reoffending when they are discharged.

Jennifer Willott: As the Minister is aware, all female Welsh prisoners are housed outside Wales. I have had a case recently of a female prisoner being held at Drake Halla great distance from her three children and her terminally ill husband. Given the importance of sustaining family relationships both to the successful reintegration of ex-offenders into our communities and to ensuring that children do not develop offending behaviour, what discussions has he had with the Home Office to improve the situation for female prisoners?

Nick Ainger: Again, that will be part of the review of new prison sites, and the Home Secretary announced a few days ago that 8,000 new places are to be created. The issue of women prisoners from Wales will form part of that review, as I understand it.

PRIME MINISTER

The Prime Minister was asked

Engagements

Charlotte Atkins: If he will list his official engagements for Wednesday 18 October.

Tony Blair: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Charlotte Atkins: My local health staff have ensured that all cancer patients are seen within two weeks, and 97 per cent. are treated within the target 62 days. Will the Prime Minister therefore guarantee that those health staff receive the training, pay and pensions they deserve, unlike the Conservative party, which attacked the pay

Mr. Speaker: Order. The question was all right up until then.

Tony Blair: First, I would like to congratulate the staff in my hon. Friend's constituency on having met the target. Of course, when we came to office, only about 60 per cent. of cancer patients were seen by a specialist within two weeks. That figure is now 99.9 per cent. for the whole country. Now, for the whole country, 97 per cent. of cancer patients are then treated within the 62 days100 per cent. in her own area.
	That is why it is important that we keep those national standards and targets for things such as cancer and cardiac care so that we ensure that we continue with the record that, in cancer alone, has saved more than 50,000 lives since 1997. For all those targets, there is a patient who has been helped to get care in circumstances where, a few years ago, they were not getting that care.

David Cameron: Last week, the Chief of the General Staff said on Iraq that
	the original intention was that we put in place a liberal democracy... I don't think we are going to do that. I think we should aim for a lower ambition.
	The Prime Minister has never said that, so is it now Government policy?

Tony Blair: No, our policy remains to ensure that Iraq continues as a democracy. We have a democracy in Iraq for the first time in that country's history, and 70 per cent. of the people came out and voted in the election, which is an extraordinary achievement, despite all the terrorism and intimidation. What is more, they voted for a non-sectarian Government in which the Sunni, the Shi'a and the Kurds all work together. I believe that the maintenance of democracy is absolutely essential for us, in Iraq and in Afghanistan. I know it is difficult, but our task is to stand with the moderates in those countries against the extremists.

David Cameron: We all support the elected Government of Iraq and we all want to get the job done, but when the Prime Minister says we are going to get the job done, we need to know what he means. It is no use having him say one thing and the Chief of the General Staff another. Let us look at something else the Chief of the General Staff said on the Today programme:
	The point that I am trying to make is that the mere fact we are in some places, our presence there, exacerbates violence.
	Again, this is something the Prime Minister has never said. Is that now his view?

Tony Blair: It is our policy to withdraw progressively from Iraq as the Iraqi forces are capable of taking on the security task. That is why it is important, when we are able to hand over to them, that we do so; otherwise we are a provocation rather than a help to them. That is why, earlier this year, we ceded control of al-Muthanna province, as there are now 5,000 Iraqi forces there doing that job. We are just withdrawing, or the Italians are, almost 3,000 forces from Dhi Qar province, where the Iraqis again will come in and do the job. We have already reduced our forces significantly over the past few years but, for example, we are working with the Iraqi forces to go through Basra part by part, making sure that we clean out the militia, put in place proper Iraqi security forces and undertake reconstruction. That is vital work, and I do not want to dismay our allies or hearten our enemies by suggesting that we will do anything other than stay until the job is done. I believe that it is a strength that there has been a bipartisan policy on this, and I hope that that is maintained.

David Cameron: My party supports what the troops are doing in Iraq [ Interruption. ] Yes. We have never backed a premature timetable for withdrawal, but we want the Prime Minister to give frank, candid answers about the situation in Iraq. The problem is that the situation on the ground is difficult and unstable, but the message given to the British people is quite different. Will the Prime Minister give a guarantee that our objectives in Iraq, our troop numbers there and the progress that we are making [ Interruption. ]

Mr. Speaker: Order. Even though you are some distance away, Mr. Ian Austin, I can both hear and see you. I will ask you to leave the Chamber if you carry on like that.

David Cameron: We will have to get used to the Chancellor's boot boys shouting in Prime Minister's questions.
	When it comes to our objectives and troop numbers in Iraq, as well as the progress that we are making, will the Prime Minister give a guarantee of frank, candid and honest answers from the Dispatch Box in the House of Commons?

Tony Blair: I hope that I have just explained very clearly what our strategy is. It is to withdraw progressively as the Iraqi forces build up their capability. For example, in the south of Iraq for the first time, there are 10,000 Iraqi troops who are trained to the fullest extent. They are very capable, and are doing an excellent job under the command of the Iraqi Army [ Interruption. ] Yes, of course it is. As we are able to cede control, we do so, but to withdraw prematurely before the job is done would be disastrous.
	There is a sense, because of the discussion in the past few days, that we have been sitting in government saying that there is no way in which we are going to withdraw and that we are going to stay there for ever. That has never been the case. May I quote to the right hon. Gentleman what I told the Liaison Committee just a few months ago? I said:
	I suspect over the next 18 months there will obviously be opportunities to draw down significant numbers of British troops because the capacity of the Iraqi forces will build up.
	I said it then, and I say it now. General Casey, who is in charge of the whole multinational force in Iraq, said back in August:
	I don't have a date, but I can see over the next 12-18 months the Iraqi security forces progressing to a point where they can take on the security responsibilities for the country.
	That is the policy of ourselves and our alliesnot just America, but the other 20 or so countries that are there. It is important that we send a signal to those people who are trying to wreck the chances of Iraqi democracy by killing innocent people. It is the self-same extremism that threatens our troops and Afghan civilians. There is terrorism in countries around the world, and the message that should go out from us and from this country is not just that we have enormous pride in our troopswe should have such pride in thembut that the policy of standing up and fighting those extremists abroad and at home is the right one, and there will be no quarter given to those who oppose us.

Hon. Members: More!

David Chaytor: Recently, the British Nuclear Group was fined 500,000 after pleading guilty to the leak of 80,000 litres of spent nuclear fuel at Sellafield. Some 25 per cent. of British Energy's share price was wiped out after it admitted to cracks in the boilers at Hunterston B and Hinkley Point, as well as underground leaks at Hartlepool. Will my right hon. Friend confirm that if, after all that, someone comes forward with a plan for a new fleet of nuclear power stations, the Government's policy remains that there will be no further subsidy from the taxpayer?

Tony Blair: Our policy remains exactly as is, and it is important that it does so. My hon. Friend's point, however, is a perfectly good one. There are all those issues to do with replacing the existing generation of nuclear power stations. The reason the issue is on the agenda, as we can tell clearly from the launch earlier in the week of the Norwegian-British pipeline, is that, over the next few years, this country will go from being 80 to 90 per cent. self-sufficient in oil and gas to importing 80 to 90 per cent. Obviously, those are fossil fuels, and there is a danger that we will become increasingly dependent on imported supplies of energy. It is therefore right that we replace existing nuclear power stations. But of course all the points that my hon. Friend raises must be taken into consideration.

Menzies Campbell: I cannot help making the observation that complaints about the Government's policy over Iraq would be more acceptable from those who had opposed the policy in the first place. The Prime Minister's answers, however, give an impression that is not borne out by events on the ground. The United Nations calculates that 3,000 Iraqi civilians are being killed every month. In those circumstances, how can the Prime Minister maintain that our presence is not, as General Dannatt told us, exacerbating the security situation?

Tony Blair: It is correct that innocent civilians are dying in Iraq. But they are not being killed by British soldiers. They are being killed by terrorists and those from the outside who are supporting them, in defiance of the United Nations resolution that says the future of Iraq should be determined democratically by the Iraqi people. Whatever disagreement people have with the original decision on Iraq, I would have thought that we should all now support the United Nations and Iraqi Government position that we should stand up against the extremists and in favour of the democrats.

Menzies Campbell: But surely we are entitled to question the strategy to which the Government are committed. Is it not clear that the opinions expressed by General Dannatt, Brigadier Butler, Senator John Warner and now James Baker lead to only one conclusionthat the Government's strategy has failed? In those circumstances, the choice is stark: change the strategy or else get out.

Tony Blair: I suspect that the right hon. and learned Gentleman believes that we should simply leave Iraq. That would be a mistake. Let me explain to him again that it is important to understand that if we desert the Iraqi Government now, when they are building up the Iraqi forces to take over security, it would be a gross dereliction of our duty to them. Incidentally, our mission in Basra, where, as we speak, British soldiers working alongside Iraqi forces have already gone through four of the 16 areas that are part of the process, is vital in restoring proper law and order to that city. If we got out now, when the job was not done, and simply deserted the situation, what good would that do, other than to ensure that those who support the extremists around the world gained heart from it? Of course, we should all debate the strategy, but the strategy is clear: progressively to withdraw as the Iraqi capability is put in place, and not to desert the democrats but to support them.

Gwyn Prosser: Does my right hon. Friend recall the days when Dover was suffering great difficulties coping with large numbers of illegal immigrants and asylum seekers? Does he recall the setting up of an induction centre and a detention centre in the town, and does he recall writing to my constituents:
	I am well aware of the strain that has been put on Dover...and how well the town has dealt with this. I also accept that Dover has suffered an unfair burden?
	With the Home Office now threatening to burden us with an open prison, in the most inappropriate site in the land, can he understand why Dover feels dumped on, and will he meet me to talk about my grave concerns?

Tony Blair: I recall my hon. Friend representing so strongly the issues in relation to migration in Dover, and we were able to deal with that problem. I am happy to meet him and to try to deal with the problem that he now has. I entirely understand that local feelings are strong. I know that he has already met the Home Secretary, and I would also be happy to meet him to discuss the matter.

Jeffrey M Donaldson: The Prime Minister will be aware of the need to ensure that there is adequate support and recognition for the innocent victims of terrorist violence in Northern Ireland as we seek to move forward. The interim victims commissioner, Bertha McDougall, who is doing excellent work, has recently published a report that indicates the need to secure long-term funding for the victims sector. Will the Prime Minister give a commitment to provide that long-term funding for those who have suffered so much?

Tony Blair: I think I can give that commitment. We have already committed some 38 million to victims' groups since 1998, and spending currently stands at 5 million a year. I am aware of the excellent work being done by Bertha McDougall as victims commissioner, and I look forward to her final report. We will look positively at her recommendations for future funding and her suggestions for spending the money more effectively.
	I also thank the hon. Gentleman and his colleagues for the constructive role that they played in the talks at St Andrews last week. I hope very much that the shared future of which I spoke from the Dispatch Box last week is somewhat further advanced now. I also hope that we can all continue to work closely to ensure that the institutions in Northern Ireland are up and running again, and that Northern Ireland's future is secure.

Keith Vaz: Last Thursday, the British Board of Film Classification gave a 15 certificate to a video game formerly called Bully. The game contains scenes of violence, including scenes of players terrorising teachers and students, teachers being head-butted and the aggressive use of baseball bats. Currys has banned it. Given the link between video games and a propensity to encourage violence that some research has demonstrated, will the Prime Minister convene a meeting of stakeholdersincluding representatives of the industry and parents' groupsto discuss the issue? Does he accept that this is not about adult censorship, but about protecting our children?

Tony Blair: First, let me praise my right hon. Friend for his work in raising awareness of the issue. I have not seen the game myself, but I know that both my hon. Friend the Minister responsible for creative industries, and my hon. Friend who is responsible for the video industry, would be happy to meet my right hon. Friend to discuss the issue. It is obviously important, and I know that there is a lot of concern about it.
	I think it can be said that the video games industry, or at least a substantial section of it, has made significant advances over the past few years, but as my right hon. Friend says, it is important for that progress to be maintained.

David Cameron: Today thousands of postmasters and postmistresses are coming to London. Will the Prime Minister explain why we were promised a one-stop shop for Government services that was never introduced, why we were promised a Post Office card account which was introduced but is now under threat, and why the option of letting sub-post offices compete in new areas was never seriously considered? Will the Prime Minister guarantee that all those matters will be examined properly and urgently in the Government's review?

Tony Blair: We can certainly examine all the options. We should and we will. I hope, however, that the right hon. Gentleman will not tell post offices that he will spend even more money on Government subsidy than we are spending.
	I might just point out that when we came to office nothing was really being done to support rural post offices. We have spent [Interruption.] Let me give the facts; then I will explain what the difficulty is.
	We have spent about 2 billion, and we are currently subsidising post offices to the tune of 150 million a year. I entirely understand why the issue is of concern to peopleof course it isbut the reason there is a problem is that more and more people are using bank accounts rather than the post office. It is important to realise that there is a process of change that any Government would have to handle. Of course we will consider all the options, but what we will not be able to do is say that even more subsidy is available than the money that we are already putting in.

David Cameron: But the fact is that if decisions are not made urgently, there will be no post office network left to protect. Will the Prime Minister accept that 4 million people have card accounts, that they value those card accounts, and that those card accounts are a vital income stream for the Post Office? Does he not understand that scrapping them could be the last and a fatal blow to the post office network? Will he review the policy and keep the Post Office card account?

Tony Blair: We are debating and considering the card account, but I must tell the right hon. Gentleman that some 98 per cent. of pensioners, and people who are becoming pensioners, choose payment into a bank account. The desire for the Post Office card account is actually declining. I am afraid that, on any basis, there is a limit to the amount of money that we can put in. That is particularly so on a day when, apparently, the shadow Chancellor is about to promise 4.7 billion worth of cuts in stamp duty on share dealing. He cannot promise to spend more money on the health service, more money on defence, more money on post offices and more money on rural services, and then promise tax cuts that simply cannot be affordable.

Hon. Members: More!

Michael Jabez Foster: Thousands more criminals have been convicted as a result of the provisions of the Criminal Justice Act 2003, allowing the police to take suspects' DNAa measure that Opposition Members oppose. Will my right hon. Friend reject any calls for a dumbing down or blunting of this important instrument in the fight against crime?

Tony Blair: My hon. Friend makes a very important point about the DNA database. The police are now matching about 3,000 offences a month and literally hundreds of murders, manslaughters, rapes and other serious offences have been solved as a result of that database. The Conservative party was opposed to it on the basis that it transgressed people's civil liberties, but it is important to build up the DNA database, which provides a vital way of fighting crime in the modern world. If people are serious about fighting crime, they cannot allege that we are not doing enough and then oppose the very measures necessary to do it.

Lembit �pik: Will the Prime Minister join me in praising the UK's air ambulances, which help thousands of patients and save hundreds of lives? Does he realise that the service survives entirely on voluntary donations and that, unless we find a sponsor, the mid-Wales helicopter will be withdrawn for the winter? Is he aware that its ambulances are barred from applying for Big Lottery funds? Will he facilitate a meeting to resolve what amounts to an anomaly, so that the service can apply to the lottery fund in order to upgrade its aircraft and continue its life-saving services?

Tony Blair: I am certainly happy to facilitate a meeting with the Minister with responsibility for air ambulances and I pay tribute, of course, to the work that they do. For the last four years or so, the NHS has reduced the burden on all air ambulance charities by meeting the cost of the paramedics who staff the ambulances. I have to say that I am not aware of any bar to the air ambulance services applying for funding and I am happy for the issue to be discussed. The lottery has awarded some 300,000 to mountain rescue and other services in previous years. I totally understand what the hon. Gentleman is saying and it is important to do our best for air ambulance services. If he has a meeting with the Minister, I will look carefully at its outcome myself.

Jeff Ennis: Is the Prime Minister aware of the five good GCSE pass rates for Willowgarth high school in Grimethorpe, one of the most deprived parts of my constituency? I have served on the school's governing body since 1979. The pass rate last year was 38 per cent. and this year it is 67 per cent. Furthermore, for the boys, it has gone up from 34 per cent. last year to 73 per cent. this year. Is that yet further evidence of what the Prime Minister meant when he said that the Government were making education their top priority?

Tony Blair: Strangely enough, I am aware of the results in Grimethorpe and they are indeed excellent results. I congratulate all the schools in my hon. Friend's constituency and the local authority in Barnsley that has done such a superb job. That achievement has been repeated throughout the country, as we have seen the best ever school results. We have moved from a position in which many authorities had a 30 per cent. or lower average of five good GCSEs to one in which we are now ensuring that they are all above 40 per cent. Real improvements are happening in schools up and down the country. It is a wonderful tribute to teachers, staff, pupils and parents, and also to the record investment and reform that the Government have provided.

Peter Viggers: When the servicemen and women of other nations are exposed to injury, they are given the best possible medical treatment, often in military hospitals, whereas ours are handed over to the national health service. Does the Prime Minister recognise that moving Defence Medical Services to Birmingham has not worked and will not work in future? Will he yield to overwhelming pressure indicating that our only military hospital, the Haslar hospital in Gosport, should be retained?

Tony Blair: I simply do not agree with the hon. Gentleman at all. First, I pay tribute to the work that is done by Defence Medical Services and to the work that the NHS is doing in looking after those soldiers who are injured.
	As there has been a lot of discussion about Selly Oak hospital in the news in the past few days, I should at least give it the chance to respond. It has issued a statement that has not been particularly well covered, but I would like to quote from two parts of it. It says:
	In the main, the articles
	in the media
	 are inaccurate, unbalanced, ill-informed and unsubstantiated.
	That is not exactly surprising, but it goes on to say:
	On no occasion has the Trust been approached to comment on any of the allegations. There have been reports of an alleged Muslim visitor verbally abusing a paratrooper at Selly Oak Hospital. Neither the Trust, nor the Ministry of Defence, has any formal or anecdotal reports or evidence that this alleged incident took place.
	The statement adds that patients are getting an excellent standard of care and there are no complaints either from the patients themselves or from those who are charged with looking after them.
	I have saidI believe it is rightthat it is important that our soldiers, particularly those who are wounded in battle, are looked after to the best possible extent. The use that is made of NHS specialist services is important in that. Those soldiers should be in an environment in which they feel comfortable, and we will look to make sure that that is the case. But I think that it would be quite wrong of people to criticise the national health service for the way in which it has looked after these people, because I know that the staff are doing their level best in difficult circumstances.

Andrew Love: Is my right hon. Friend aware that in this year's world league table for foreign investment Britain has come at the top? Not only has foreign investment been greater in Britain than in China, but it is greater in Britain than in the United States. Indeed, foreign investment in Britain is even greater this year than in China and the United States combined. Does that not show that, unlike the spokesmen for the Opposition, the international business community has real confidence in the strength of the British economy?

Tony Blair: My hon. Friend is absolutely right to say that the latest figures show that 85 billion worth of direct foreign investment came into Britain last year, making it the most popular destination in the world ahead of both the United States and China. We have had the strongest economic growth, low inflation, high employment and low unemployment. The Organisation for Economic Co-operation and Development has said:
	Macroeconomic performance
	in Britain
	over the last decade has been a paragon of stability.
	That is a Labour Government delivering a strong economy after the years of boom and bust and depression under the Tories.

Greg Mulholland: The Prime Minister will be aware of the case of the Leeds man, Mirza Tahir Hussein, who is to be executed in Pakistan on 1 November following a legal process that can only be described as deeply flawed. The Prime Minister will also be aware of the proposed royal visit of Prince Charles and the Duchess of Cornwall, who will be in Pakistan at the same time. Does the Prime Minister agree that the royal visit should not go ahead if the Pakistani authorities intend to carry out this gross miscarriage of justice? Will he also tell the House what he intends to do before that time to persuade President Musharraf to use the powers he has to overturn and resolve this difficult situation?

Tony Blair: If the hon. Gentleman will forgive me, I will not comment on the royal visit. However, I will say that we have raised this case constantly with the Pakistani authorities and I raised it personally with President Musharraf when he was here a couple of weeks ago. I hope, even at this stage, that there is an intervention to ensure that this does not take place; it would be very serious if it did. There is a limit to what the President can do, but I hope that he can use his powers, and we will continue to make representations right up until the last moment. I can assure the hon. Gentleman of that, because we have raised the case on many occasions for all the reasons that are well known.

Ben Chapman: Given its potential to engage young people in politics, to teach respect and responsibility in communities and societies and to tackle disengagement and antisocial behaviour, does my right hon. Friend share my considerable disappointment at Ofsted's reporting of poor standards of teaching in citizenship? Will he see that its recommendations are implemented comprehensively and swiftly?

Tony Blair: The point that my hon. Friend makes is absolutely right, and we will look at those recommendationswe are looking at them very carefullyand, obviously, we will want to implement them. Citizenship is relatively new; it has come on to the curriculum only over the past few years. But my hon. Friend is right to stress its importance, and in view of the debates that are happening at present about how people better integrate into our society and how people become more responsible citizens, citizenship is an absolutely central part of teaching in school. It is important that we improve the quality of it, and that we make sure that, where classes are inadequate, they are substantially improved.

James Paice: Now that the National Audit Office has laid bare the chaos of the Rural Payments Agency, and given the potential fine of 141 million by the European Union because of the inaccuracies, plus the fact that the then Secretary of State was warned in June 2005 that the project was off course and yet did nothing, what sort of Government do we have that keep the then chief executive on full pay six months after he was sacked, and promote the responsible Minister to Foreign Secretary?

Tony Blair: First, as we have said on many occasions, we are sorry for the delays that there have been. Now, 97 per cent. of farmers have received full or partial payments. The Rural Payments Agency is in contact with the remaining high-value cases, and it is working to pay the remaining claims as soon as possible.

Lynne Jones: In June, my right hon. Friend told me that the Government need to do more on social housing, yet in the forthcoming two years Birmingham city has so far been allocated less money for new social housing than in the previous two years. What sense does it make for housing benefit to have been paying, for the last 20 months, 635 a month for Mr. and Mrs. Garghen in my constituency and their five children to be accommodated in inadequate temporary accommodation, when had we had a decent council house-building programme, the rent would have been less than half that amount?

Tony Blair: I totally understand the point that my hon. Friend makes, but it is just worth pointing out that we have substantially increased investment in social housing; not all of it is provided in the traditional way, but we will continue to do that. It is only as a result of this Government actually putting the money into social housing when we came to office that, for example, many elderly people [Interruption.] Well, there was no support for elderly people in social housing before this Government came to power. We are now spending about 2 billion on that. That is investment that this Government put into social housing, and the Conservatives voted against.

Liability for Suicide

Iain Duncan Smith: I beg to move,
	That leave be given to bring in a Bill to make provision about liability for suicide; and for connected purposes.
	May I say how pleased I am to see that the Leader of the Opposition, my right hon. Friend the Member for Witney (Mr. Cameron), is in his place to listen to my argument? I know how strongly he feels about this subject.
	I wonder how many Members realise the extent of domestic abuse in this country. Let me give some figures. One in four women in Britain are abused in some form or another. More particularly, one in nine suffer physical abuse on a regular basis, and, worse, every week two women are killed as a result of such abuse.
	When I first discovered those figures, I was absolutely horrified. That happened as a result of my involvement with the Centre for Social Justice. I had discussions with Sandra Horley of Refuge, who explained the full extent of such abuse to me. I pay tribute to Refuge for the remarkable work that it does in helping those who have been, or are being, abused, and in particular to Sandra Horley, the chief executive, whose energy and commitment is phenomenal.
	I urge the Government to think positively about including an offence of liability for suicide in any new legislation, and also carefully to consider expanding the definition of diminished responsibility so that it includes a proper recognition of psychological injury. That would allow the courts properly to take account of a broader range of psychological impacts on victims of abuse.
	Research undertaken in the UK and abroad demonstrates that there is a causal link between attempted or completed suicide and concurrent experience of domestic violence. In 2000, UK statistics showed that between 30 and 40 per cent. of female suicides were committed by those who had been subjected to domestic violence. In the United States, research has shown that there is a temporal connection between suicide attempts and hospital treatment for injuries resulting from domestic violence. Importantly, this research went on to show that, of the victims of domestic violence who had attempted suicide, nearly 70 per cent. had done so within six months of hospital treatment, and, staggeringly, that nearly 40 per cent. had done so on the same day, after discharge.
	Let me illustrate all this by outlining the recent case of Mrs. Gurjit Dhaliwal, who hanged herself at the family home in Southall, west London, on 22 February 2005. Mrs. Dhaliwal's brother, Nav JagpalI understand that he is here todaysaid that he and his family had watched helplessly while his sister had suffered abuse over a sustained period, going back to 1979. Mrs. Dhaliwal had temporarily left her husband on a number of occasions because of the abuse; however, each time she returned. When the police found her after the suicide, they noticed that she had fresh cuts to her forehead, and they also discovered on searching the house a journal that she had kept over the last five months of her life, in which she harrowingly alleged physical and emotional abuse by her husband. In fact, Mr. Dhaliwal even admitted on questioning that he had hit her on the evening that she died. Because of that admission, the Crown Prosecution Service decided to proceed against Mr. Dhaliwal on a charge of manslaughter, on the basis that this behaviour caused his wife to kill herself.
	It might assist the House if I try to explain some of the incredible twists and turns necessary under existing English law in trying to prosecute this case. There are various routes to achieving a verdict of manslaughter. In this case, the CPS tried to prove that the defendant had done something unlawful and dangerous that had caused Mrs Dhaliwal's death. However, as a foundation for such a charge of an unlawful act in English law, a prosecution has ultimately to prove that the act or those acts caused, or contributed significantly to causing, the death of the deceased.
	To do that, the prosecution had to use a definition established in an Act of Parliament passed in 1861, together with more recent case law equating psychiatric injury with bodily harm, the proposition being that Mrs. Dhaliwal had suffered psychiatric injury as a result of this pattern of domestic violence, and that that amounted to bodily harm in the meaning of the legislationa complicated scenario. Interestingly, on the evidence of a number of experts, who disagreed throughout the case, the court had to rule that Mrs. Dhaliwal had suffered psychological injury, but because that fell short of psychiatric injury, it did not amount to the bodily harm definition necessary according to the law.
	Let me quote what the Court of Appeal judge, Judge Roberts QC, said in summing up:
	It is very hard not to see some connection between the incident of violence which appears to have taken place shortly before and her death.
	However, it was ruled that under the Offences Against the Person Act 1861, it was not possible to stretch the definition of psychological injury so that it could count as bodily harm. Recognising the problem, the Court of Appeal said that it would be more satisfactory if the law provided a less convoluted route in a manslaughter conviction in cases of this kind. The following is the most apposite quote from the judge:
	I would have thought there was some force in the argument that the 'last straw' played a significant part in causing her death.
	I would add that in fact, that is common sense. Surely there is hardly anybody in this Chamber or among the general public who has not long believed that there are often connections between suicide and things that have gone on before.
	Refuge's recent experience of supporting Mr. Nav Jagpal in the case of his sister, Mrs. Dhaliwal, and of other cases, has led it to believe that the law as it stands offers little or no justice to such women, or to the families whom they leave behind.
	I know what the House will say. Many will say that hard cases make bad laws, but I am not trying to persuade the House or the Government to change the law simply because of one case. It is not an isolated case. I offer up this case because it is such a high-profile example of what Refuge and many other campaigners believe is a failure of natural justice. It is absurd to have to rely on an Act that was passed in 1861, before psychiatry was even born and before the link between physical and mental trauma was fully appreciated. That position is supported by a number of national newspapers, including  The Sun and  The Times, which featured articles on this matter.
	Surely the law should recognise that there are some assaults that, taken in isolation, may not appear to be life threatening, but which, when combined with a pattern of behaviour over a period of time, could result directly in the victim taking their own life. Abuse is not just about the physical effect. Someone who is regularly attacked suffers psychological problems, and that psychological damage can ultimately be more harmful than the individual and often isolated instances of physical abuse.
	I know that it is tempting for someone listening to this speech to say that they do not understand what the problem is, and that someone being abused should just leave. I suppose that in a simplistic and perfect world that would be the case every time, but I am afraid that the world is not that simple, and the situation is much more complex than that. Far too many victims of abuse make qualified decisions to stay with their abuser because they cannot leave. Perhaps the fear of leaving their children behind is part of that, or the fear of having no one to turn to and no place to go, or the absence of any money. Perhaps most of all, there is the fear that should they fail to get away cleanly, the abuse that they will suffer on their return will be much greater.
	Domestic violence is a major problemin some cases, possibly because of changes to the way in which people live today, with more single women bringing up children on their own. However, domestic abuse is also found in what appear to be some of the most stable households. The key point that we should all admit and accept is that we must never make any excuse for the abuser. Abusers have no excuse. Their abuse is their responsibility, and they should face the consequences of that abuse. That is why I ask the Government to help us and the House genuinely to consider this motion for a new law of liability for suicide. We should not have to watch as any further cases collapse because the abuser's victim is dead and thus unable to testify. After all, even in financial terms, domestic violence is estimated to cost the country at least 23 billion a year.
	I will leave the House not with my words, but with those of Mrs. Dhaliwal's brother, Nav Jagpal, who has campaigned strongly on this matter. After the failed attempt to prosecute, he said:
	it is unbelievable that we are allowing this kind of thing to happen all over the country.
	He concluded, movingly:
	I could not save Gurjit but I will not let her death be in vain.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. Iain Duncan Smith, Mrs. Claire Curtis-Thomas, Mrs. Nadine Dorries, Dr. Liam Fox, Mrs. Louise Ellman, Lembit pik, Justine Greening, Mr. Edward Vaizey and Jim Dobbin.

Liability for suicide

Mr. Iain Duncan Smith accordingly presented a Bill to make provision about liability for suicide; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 October, and to be printed [Bill 229].

Orders of the Day

Companies Bill [ Lords]
	  
	[2nd( )Allotted Day]

[Relevant document: The Twenty-eighth Report from the Joint Committee on Human Rights, Session 2005-06, Legislative Scrutiny: Fourteenth Progress Report, HC 1626.]
	 As amended in the Standing Committee, further considered.

New Clause 1
	  
	Contents of directors' report: business review (No. 2)

'(1) Unless the company is subject to the small companies' regime, the directors' report must contain a business review.
	(2) The purposes of the business review are to inform members of the company, help them assess how the directors have performed their duty under section 173 (duty to promote the success of the company), and assist potential investors to decide whether to invest in the company.
	(3) The business review must contain
	(a) a fair review of the company's business, and
	(b) a description of the principal risks and uncertainties facing the company.
	(4) The review required is a balanced and comprehensive analysis of
	(a) the development and performance of the company's business during the financial year, and
	(b) the position of the company's business at the end of that year,
	consistent with the size and complexity of the business.
	(5) The business review must, in a manner consistent with the size and complexity of the company, include
	(a) the main trends and factors likely to affect the future development, performance and position of the company's business, and
	(b) information about
	(i) environmental matters (including the impact of the company's business on the environment),
	(ii) the company's employees,
	(iii) social and community issues, and
	(iv) persons with whom the company has contractual or other arrangements which are essential to the business of the company,
	including information about any policies of the company in relation to those matters and the effectiveness of those policies.
	If the review does not contain information of each kind mentioned in paragraph (b)(i), (ii), (iii) and (iv), it must state which of those kinds of information it does not contain.
	(6) The review must, in a manner consistent with the size and complexity of the company, include
	(a) analysis using financial key performance indicators, and
	(b) where appropriate, analysis using other key performance indicators, including information relating to environmental matters, employee matters, supplier matters and social and community issues.
	Key performance indicators means factors by reference to which the development, performance or position of the company's business can be measured effectively.
	(7) The review must, where appropriate, include references to, and additional explanations of, amounts included in the company's annual accounts.
	(8) In relation to a group directors' report this section has effect as if the references to the company were references to the company and its subsidiary undertakings included in the consolidation.
	(9) Nothing in this section requires the disclosure of information about impending developments or matters in the course of negotiation if the disclosure would, in the opinion of the directors, be seriously prejudicial to the interests of the company.'. [Jon Trickett.]
	 Brought up, and read the First time.

Jon Trickett: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following:
	Amendment (a) to the proposed new clause, at end of subsection (2), insert
	'and potential customers to decide whether to purchase the company's goods or services.'.
	New clause 2 Reporting standards
	'(1) A business review must
	(a) state whether it has been prepared in accordance with relevant reporting standards, and
	(b) contain particulars of, and reasons for, any departure from such standards.
	(2) In this section, reporting standards means statements of standard reporting practice which the Secretary of State shall ensure are issued and which
	(a) relate to business reviews, and
	(b) shall be issued by a body or bodies specified in an order made by the Secretary of State.
	(3) References in this section to relevant reporting standards, in relation to a company's business review, are to such standards as are, in accordance with their terms, applicable to the company's circumstances and to the review.
	(4) Where or the extent that the directors of a company have complied with a reporting standard, they are presumed (unless the contrary is proved) to have complied with the corresponding requirements of this Part relating to the contents of a business review.'.
	New clause 75 Requirement for audit of business review
	'The auditors must state in their report
	(a) whether in their opinion the information given in the business review for the financial year for which the annual accounts are prepared is consistent with those accounts; and
	(b) whether any matters have come to their attention, in the performance of their functions as auditors of the company, which in their opinion are inconsistent with the information given in the business review.'.
	Amendment No. 1, page 196, line 30, leave out clause 423.
	Amendment No. 760, in clause 423, page 197, line 2, leave out
	'In the case of a quoted company'.
	Government amendments Nos. 821 and 822.

Jon Trickett: New clause 1, which I tabled, has been signed by 51 other hon. Members. That significant body of opinion indicates the strength of feeling about the subjects with which the proposal deals.
	One of the historical roles of the House has always been to attempt to protect the general social interest against specific actions of private interests. The Bill is an attempt to do that, but with a light touch. It is clear that corporations have become increasingly important actors both inside the United Kingdom and on a global scale. Many of the world's largest companies are absolutely enormous. The fact that Wal-Mart, the world's biggest corporation, is larger than 150 nation states shows the size of the private interests that are emerging. It is for nation states and national Parliaments to reflect on private power and its consequences and to attempt, albeit in a way that is not too burdensome, to protect the social interest.
	I noted that the hon. Member for Huntingdon (Mr. Djanogly) claimed in the House yesterday that corporate social responsibility, which is the name that we give to the attempt to encourage companies to behave more responsibly, is now taken more or less seriously by all the larger companies based in this country. That was a sweeping andsome might saycomplacent statement, given that there are companies whose actions still cause problems both in the United Kingdom and abroad. For example, I draw the House's attention to the UK-based mining giant, Anglo American. A recent report indicated that poor communities in Ghana were seriously afflicted by environmental pollution that was a by-product of the company's operations. The water supply was poisoned and the farming land was degraded, so the local people could not carry out their traditional pursuits of fishing and farming.
	I do not want to give the impression that I am vilifying the whole of the UK corporate sector, but we must be honest in the House about the fact that, unfortunately, there are widespread examples of such actions. For example, it is said that Shell is in breach of statutes in the Niger delta by flaring off the by-products of its activities, which produces carbon dioxide and other greenhouse gases that damage the environment. It is suggested that Shell is producing as much pollution through its activities in the Niger delta as the rest of west Africa. It is also said that Tesco is using unfortunate techniques in relation to female workers in South Africa. The list goes on, so I do not need to strengthen my point. We should simply reflect on the fact that private power cannot be left totally unaccountable in this modern world, and that is the context of our debate.
	The Conservative party has been seen to represent the narrow class base of shareholder interest, but the right hon. Member for Witney (Mr. Cameron), at least, has realised that the party needs to break with that narrow sectional interest. He placed an advert in the newspapers in which he said that it was his business not to stand up for big business,
	but to stand up to big business when it's in the interest of Britain and the world.
	There was an understanding that a form of regulation for misbehaving companies was needed, and I began to think that the Conservative party might become part of a progressive consensus on corporate regulation. I was thus disappointed to read several of the speeches made, and amendments tabled, by Conservative Members.
	The right hon. Member for Witney said in a speech on 9 May:
	I've never believed that we can leave everything to market forces.
	He was quoted in  The Sunday Times on 7 May 2005 as saying that the regulation of companies
	clearly has an important role in ensuring competition and setting minimum acceptable standards.
	It was therefore assumed that the Conservatives would join in a consensus on light-touch regulation of business. That is precisely the type of regulatory framework that the Billthe largest ever to have come before the Housewould incorporate into law.
	At the centre of the Bill is the concept of enlightened shareholder value. Again, I should have thought that there would be a consensus across the House that if the aim is to ensure that the corporate sector operates in a socially responsible fashion, enlightened shareholder value could be at the core of any legislative framework that we introduce. I should have thought that it would be apparent to everyone that if shareholders are to have the capacity to act in an enlightened way, information, particularly information on the way in which the company is being managed by its directors, is key. That brings us to the heart of the provisions: the business review.
	The Bill as a whole is intellectually coherent. It proposes the concept of enlightened shareholder value, and an instrumentthe business reviewthat will enable shareholders to act in ways that secure the best interests of the company, applying a definition that goes beyond narrow financial considerations, and encompasses the environment, both social and ecological, in which the company operates. I would argue that the business review is the core of the Bill's intellectual underpinning. The Bill is a good measure, containing much that is to be welcomed. However, it seems to methis is why I proposed new clause 1that some of the detailed provisions on the business review could be extended. I note that the Government have been persuaded to table an amendment to new clause 1, to which I shall refer shortly.
	The business review requirement might be extended in relation to those categories of company that will be required to produce a review. There must always be boundaries around any legislation, and it is for the House to define where those boundaries fall. The Bill therefore states which classes of company should produce business reviews. The Government have drawn the boundary around larger companiesby definition, those that are listed on the stock exchange. That will cover about 1,300 companies, which are among the largest in the UK. It is welcome that the Government have done that, but there are 4 million companies in the UK, and many are larger and have a greater impact on life in the UK and in the rest of the world than the companies that fall within that category.
	In new clause 1, I propose a modestI might even say timidextension to the category of companies that will be required to produce a business review.

Jim Cousins: In the course of his compelling speech, my hon. Friend has mentioned Tesco, which is a quoted company and would therefore be covered by the business review requirement, as would Sainsbury. Asda, however, as a subsidiary of Wal-Mart, is not quoted on the stock exchange and is not covered by that requirement. New clause 1 is an attempt to correct that.

Jon Trickett: My hon. Friend is right. Asda is part of the Wal-Mart group, which, it is alleged, employs teams based at its headquarters in the United States to break trade unions. Such activities cannot be justified. We have seen little of that in the United Kingdom, but it is part of Wal-Mart's corporate strategy. Even more worrying is the allegation that the Wal-Mart group of companies receives supplies from thousands of factories in the People's Republic of China that pay workers 13 cents an hour, when the minimum wage in China is 31 cents an hour. It is probable that many of those commodities are entering the United Kingdom via Asda. It has been put to me that, as part of an American corporation, Asda cannot be covered by the legislation, but I have checked and found that Asda's corporate headquarters remain registered in the United Kingdom. I suggest to the Minister that Asda may well be covered by UK legislation.
	As my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) has illustrated, many companies that have a huge impact on our social and ecological environment will be excluded from the Bill. This morning, I obtained a list of the top 10 private companies. John Lewis Partnership is owned by its employees. It is a model company that reports regularly on its social impact, but although it employs 63,000 people in the UK and has a turnover of 5 billion, the company will not be required to report under the Bill if new clause 1 is not added. If I was in charge of Tesco or another retailer and I was told that my company, because it is listed, will have to report, but my competitorsJohn Lewis Partnership or Asdawill not, because they are private companies or wholly owned subsidiaries, I would say that the playing field is not level.
	No logical intellectual case can be made for excluding larger private companies or subsidiaries that are registered in the UK. Littlewoods, which has 29,000 employees, will be excluded, as will another private company, John Swire and Sons, which has 76,000 employees. The case for requiring those companies to produce a business review is overwhelming. I understand that the Government had to draw a boundary somewhere, but I believe that we could extend the requirement beyond the 1,300 listed companies. The new clause would do that.
	In new clause 1, I suggest that medium-sized companies should also be included. Why should such companies be excluded? A medium-sized company is, by definition, quite a large operation: it may have a turnover of tens of millions of pounds and 250 or more employees. Such companies are significant players. I would like to hear the Minister's explanation of why the boundary was drawn where it was. If the Government accept new clause 1, the number of companies covered by the requirement to produce business reviews will increase from 1,300 to 36,000. That is a modest extension, given the fact that there are 4 million companies in the UK.
	The new clause would also correct some of the anomalies that will be thrown up by the Bill. We have discussed the retail sector and the anomaly that some retailers will have to produce business reviews but other, perhaps larger, companies will not. It is anomalous that Virgin will not have to produce a business review. The company claims to be environmentally soundthat is what Richard Branson regularly tells us and it is part of the image that he projects for his company, and I have no reason to doubt it. However, Virgin will not have to produce a business review, whereas British Airways will. How can it be right to have such an uneven playing field for the two companies, simply because of the definition set out in the Bill? Another excluded group of companies consists of those listed on the alternative investment market. Many companies with an AIM listing have a significant impact on our society and on the environment. It cannot be right that companies listed on the London stock exchange will have to produce a business review, but those on AIM will not.
	The second proposal in new clause 1 deals with supplier issues. There will probably be further debate about that, because the Minister has tabled her own amendment. I notice the expressions of what I regard as phoney outrage by the CBI in this morning's newspapers. That is unfortunate because the proposal is modest. If a corporation is to produce a business review that comments on those aspects of its activities that have an impact on the rest of society and on the environment, to exclude the supply chain would vastly diminish the amount of reporting required of the company. We are strongly in favour of the supply chain being included.
	It is often said that some of the supermarkets operating in the UK, which are increasingly dominant on the high street and elsewhere, use methods that have an oppressive effect on the agricultural sector in the UK and beyond. It is regularly argued that workers are being brought in from eastern Europe to produce agricultural productsstrawberries, potatoes and so onunder the most appalling conditions. They are employed not by Asda, Tesco or other supermarkets directly, but by suppliers. If the supply chain were brought within the remit of the Bill, it is arguable that horrific arrangements such as that of the cockle pickers and the gangmasters would be exposed at a much earlier stage, rather than in the tragic way in which that situation emerged. Supply issues are important, and it is good to see that the Government have reflected on the matter.

Andrew George: I strongly support any effort to ensure that supplier relationships are incorporated in the Bill. Can the hon. Gentleman expand on the challenges that that presents? Suppliers are complaining, anonymously of course, that there are overriders, lack of written contracts, many short-term changes and return of goods on rather questionable bases. Many of those suppliers fear the consequences of having such matters too publicly and transparently debated. Will the hon. Gentleman explain how suppliers would be protected by the measure?

Jon Trickett: I thank the hon. Gentleman for raising that important point. The dominant market position that certain companies secure in their own sector could be used to the disadvantage of those further down the supply chain, often smaller companies living hand to mouth. Anyone who, like me, seems unable to sleep the night through and listens to Farming Today, an excellent programme at 5.45 am on the BBC, will regularly hear farmers speaking anonymously. I never thought I would be an advocate for the farming community, but it is interesting to hear people further down the supply chain objecting to the techniques being used by the retail sectorby the large supermarketsto drive down the conditions in which their suppliers are working.
	We know that many companies are moving their production overseas. Several clothing factories have closed in my constituency. The company that owned the factory remains and continues to supply retailers, but the production has moved overseas, largely to take advantage of what the company would regard as favourable labour conditions overseas, which probably means poverty wages and extremely poor contractual standards in respect of employment law.
	If we were to secure a more balanced relationship in the supply chain, with longer-term relationships and more balanced ones too, that would benefit not only the rest of society and the work force, but the larger companies, which would reveal the suppliers of materials to them. In the long term business should operate through secure relationships down the supply chain. That would obviously create a good business environment.
	I said earlier that the cries of outrage in many of the newspapers this morning sounded somewhat phoney. I notice that the much lamented operating and financial review, which some months ago got lost somewhere along the line, included supply chain issues. Many companies that belong to the CBI and are part of the corporate world had already begun to include supply chain issuesstronger issues than my right hon. Friend the Minister is proposing. The CBI should not be expressing outrage at such a modest proposal. Many in the corporate sector had already adapted to it, and it would create more harmonious economic relationships down the supply chain.
	There is a third issue in the new clausemateriality, which I shall try to explain. The business review requires directors to report to shareholders on matters that are directly material to the company's narrow financial health. It is accepted that companies seek to maximise the return to their shareholders, and that that is how the system works. However, it is possible to take a slightly longer-term view than the return of profit in the here and now. A company's actions in the medium to longer term could be damaging to the company itself.
	An example is oil production in the Niger delta, which I mentioned a few moments ago. In the end, if the company continues to break Nigerian law, damage the local environment and exploit local people, it will not be in the company's interests. Eventually, Nigeria will turn against the company. New clause 1 suggests a more relaxed version of materialitywhat is material to the company's operationthan the version in the Bill. It will be interesting to hear the Government's arguments for suggesting such a narrow definition, rather than a slightly wider one.
	I have tried to provide a philosophical explanation of the current position and the Bill, which I warmly welcome, and to suggest how, without changing the world fundamentally, the Government might move the business review forward. Shareholders are unable to judge what is in the interests of the company if the business review is not made available to them. I would argue for a wider definition of that group.
	I began my comments by referring to the right hon. Member for Witney and quoting some of his comments, which I found amusing. I shall conclude with his remarks to  The Sunday Times on 7 May. He said:
	I'm not prepared to turn a blind eye if the system sometimes leaves casualties in its wake.
	He went on to say:
	Unless shortcomings are addressed, the entire system risks falling into disrepute.
	I rather think he is speaking about capitalism. It is not a word or a concept that we often use in this place. For the moment at least, we are not challenging the entire capitalist system.

Colin Burgon: Why not?

Jon Trickett: That is a debate for laterin the bar, probably.
	I simply say that it is clear that if the corporate sector fails to move with the times, if private power insists on remaining secretive and lacking in transparency, when danger occurs, individual companies, and perhaps even the entire system, will fall into disrepute.

Justine Greening: It is a great pleasure to be at the Dispatch Box for the first time, although, I have to accept, after today, possibly the last. I am pleased to speak for the Opposition on this part of the Bill, although it is not exactly as I had expected. My understanding was that an Opposition spokesman generally moves amendments to improve and change Government Bills, whereas I have no amendments to move because we are happy with the business review as it appears in the Bill. Instead, it is the Government and their Back Benchers who are trying to change their legislation. The situation is perverse, but I have no doubt that we will soldier on and have an interesting debate. I should say, however, that the Government have been particularly late in tabling their amendments.

Adam Price: Is it not a sad indictment of the official Opposition that the real opposition does not come from the Conservative party?

Justine Greening: There was I thinking that we had seen the end of Punch and Judy politics for the sake of it. We are an Opposition that have for some time now said that, when we are happy with legislation, we will not oppose it just for the sake of it. We saw no reason to change that with the business review, because we support increasing and enhancing the corporate social responsibility framework in this country.
	We are well aware that the business review started life as the operating and financial review many years ago. Eight years ago, children now in university were in primary school when the operating and financial review was first developed and work on the Bill started, but we have finally reached the stage where we have a business review in the Bill, which Conservative Members support.
	We recognise the importance of the role of businesses in creating jobs and prosperity, but we also recognise the broader impact of businesses not only on the environment but on the local and international communities in which they operate. There is no inherent contradiction between companies striving for long-term financial success and demonstrating strong corporate responsibility. In fact, the Minister herself correctly described those two issues as being interlinked and interwoven.
	At the heart of any successful company is an in-depth understanding of what its customers want and value. Perhaps more than at any time in the past, customers place a value not just on what they are purchasing from companies, but on the way in which companies have carried out their business in order to provide those products or services. Companies can therefore be at the forefront of the push to tackle environmental and ethical issues. They do not have to be at the back of that argument.
	The business review as set out in the Bill will be an important part of that developing corporate social responsibility agenda. As we approach the Queen's Speech, which Conservative Members very much hope will contain a climate change Bill, it is possible to see the emergence of a real corporate social responsibility reporting framework in the UK. The business review could play a vital role in that, and we certainly hope that it does, but new business legislation often involves additional costs and burdens on those businesses that it affects.
	The Opposition recognise the importance of establishing for the first time a formal narrative of a company's development risks and uncertainties and the wider impact of its relationship with the environment, its employees and the community. However, those of us who have worked in businessI should declare that I am a chartered accountantalso know how careful Government need to be before adding any unnecessary burden on business. As the Minister said on Second Reading, we should ensure that the new law is as clear, simple and modern as possible, that it is fit for today's business purposes, and that it does the maximum possible to get rid of any unnecessary burdens of regulation.

Jim Cousins: Much of what the hon. Lady says is welcome, but has she spotted that the business review that she supports would not cover, to take a significant climate change issue, Thames Water, a company in which her constituents will have a great interest?

Justine Greening: The business review clearly sets out the need for directors to have a narrative on social and community issues, and also environmental issues.

Jonathan Djanogly: My hon. Friend makes an excellent point, but the point made by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) was wrong. Thames Water and other companies may be foreign-owned, but they have nothing to do with the Bill. He has just demonstrated one of the weaknesses of using the Bill to advance corporate social responsibility.

Justine Greening: Throughout the Bill, the Government have been clear about what the business review is intended to do, and it is to be a narrative for the members of the company. I am sure that the Minister will want to deal with whether the Bill should have a much wider application to any company that is operating within UK jurisdiction. We need to strike the right balance with this legislation. That has been difficult to achieve and later we will debate whether we have achieved it. That has obviously partly been because it fits so clearly into a broader and important debate on the environment, but also because company law is necessarily limited in the extent to which it can be used as a vehicle to address such concerns.
	I fully recognise the concerns that the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) raised, but the question is what is the best way to address them. I agree with Lord Sainsbury and many others both from the Lords and in this place, including Ministers and Opposition Members, that company law is one way to pursue the need for companies to review more carefully the effect of their operations on the environment, but it is not the only route by which that can take place, so we need to be careful.
	As the Minister said, company law is not the best vehicle for addressing wider social and environmental concerns. We can address those objectives, as some Government Members have said, through domestic legislation, health and safety measures and environmental protection, on which progress has been made.

Andrew George: I am following the logic of what the hon. Lady describes. Bearing it in mind that Conservatives appear to support the Government on this issue with not quite the same enthusiasm as they supported military action in Iraq, but just a little less than that, which aspects of the relationship between supermarkets and suppliers does she feel will be best served by elements within the Bill? Given that she wants to avoid unnecessary burdens on businesses, does she accept that one of the biggest burdens on the many suppliers in the supply chain, particularly to supermarkets, is their relationship with the supermarket, and that it is that burden that they need to have lifted and made more transparent?

Justine Greening: We will come to that, but I was not aware that this was a Bill solely structured to deal with supermarkets. We need a Bill that will work for the whole of our business environment, not just one sector in it. There is a wealth of difference between measuring directors' effectiveness in performing their duties, which is what the narrative is there to do, and taking steps to change company culture.
	Whether in the other place, in this Chamber, in Committee or even outside the House, the problem of where to strike the balance has been keenly debated. In fact, it has had eight years of debate, with much money being wasted by companies on the operating and financial review preparation, which was subsequently dumped by the Government. The Opposition believe that balance has been achieved, which is why we support the business review in the Bill.

Lembit �pik: I must declare an interest, because I work with the Chartered Institute of Marketing. The Bill does not explicitly require the reports to cover the marketing performance of a company. The Chartered Institute of Marketing feels that that is an omission and that shareholders should have the right to know the strategic and tactical operations of the marketing conducted by companies.

Justine Greening: We are in danger of making the business review far too prescriptive, particularly given that we know that more environmental legislation is likely to be enacted. What is needed is a narrative that has a good enough framework for the outcomes that we want, which includes information for members on environmental issues and the impact on people, employees and communities. However, it should not be so prescriptive that it closes down the debate and potentially gives directors the chance not to disclose something, because it is not on the list that they have been given. I have no doubt that companies that care about corporate social responsibility reporting will want to give a full and useful report in the business narrative, which will allow members to see which companies take that responsibility seriously. We feel that the Government have got the balance right, which is why it is so perplexing that they seem unhappy with the business review.
	I will discuss new clause 1 shortly, but first I shall touch on amendments Nos. 821 and 822. I was surprised when the Minister tabled those amendments at such a late stage, because on Second Reading she said:
	The provisions on directors' duties, together with the provisions on narrative reporting, will give a huge boost to our corporate social responsibility agenda. If we went further, we would damage our success in attracting companies to incorporate in Britain, along with the economic growth and jobs that that brings. In a global economic environment with global markets, companies can choose where they wish to incorporate their business, so company law must focus on its core purpose to create the right environment for business success.[ Official Report, 6 June 2006; Vol. 447, c. 216.]
	Earlier this week, the Minister lost sight of that core purpose. Yesterday, the debate involved the point that directors have an overall duty to promote the success of their company. Do DTI Ministers not have the same duty to promote the success of British business? I am amazed that I am having to remind the Minister of the core purpose of her job.
	When did the Minister decide to table amendments Nos. 821 and 822? They appeared after the main body of amendments was published, so they were presumably tabled this week, but when did she take the decision and why has she tabled them? I have no doubt that we will receive an explanation, but perhaps she will cover who or what changed her mind on the business review, which the Government have supported since they ditched the operating and financial review. The Government have had the whole summer since the Bill was in Committee, so why were the amendments tabled so late? Why could the amendments not have been tabled last week?
	What steps did the Minister take to consult business on the impact of the amendments before taking her decision and was the advice from business given to Ministers? My understanding from the CBI is that the Minister conducted no consultation with business whatsoever. The CBI has said that the amendments will place an extra burden on businesses due to the costs of compliance and legal advice. The Institute of Directors has also expressed its concern about amendments Nos. 821 and 822, saying:
	it is unacceptable for the government to table amendments that make significant policy changes at such a late stage and without any consultation.

Margaret Hodge: I welcome the hon. Lady to her Front-Bench position and wish her well. The issues that she has raised are entirely procedural.

Justine Greening: Procedural?

Margaret Hodge: Yes, procedural. How I did it and when I did it are procedural issues, but I want to hear the hon. Lady's comments on the substance of the amendments. Does she agree with the right hon. Member for Witney (Mr. Cameron) that she should stand up for not only the interests of business, but for the interests of Britain?

Justine Greening: I am interested to hear the Minister's comments. I shall discuss the substance of the amendments, but the way in which the Government tabled them at such a late stage is disgraceful. It is not acceptable for her to say that I cannot question how the amendments were tabled. I am trying to stand up for the British economy and the jobs that depend on its success, and it worries me that a DTI Minister takes that matter so glibly.

Margaret Hodge: Is the hon. Lady seriously suggesting that the amendments, which were subject to wide consultation when we consulted on the business review, will damage British business and British jobs?

Justine Greening: It is not my suggestion, although I happen to agree with it; it is the right hon. Lady's suggestion.

Margaret Hodge: The hon. Lady needs to substantiate that claim. I cannot understand how the amendments, which will give greater depth to the narrative reporting, will damage British business. Will she explain how they will damage British business?

Justine Greening: On Second Reading, the Minister said:
	If we went further, we would damage our success in attracting companies to incorporate in Britain.[ Official Report, 6 June 2006; Vol. 447, c. 216.]
	That is why I am asking whether the Government have assessed whether the amendments will damage British competitiveness.

Mike O'Brien: How will the amendments damage competitiveness?

Justine Greening: I had hoped that Ministers would have addressed that question themselves before tabling amendments. If the Minister for Industry and the Regions has not consulted business, will she agree today to meet all the key stakeholders who will be affected by the amendments?  [ Interruption. ] Ministers are still quizzical about how the amendments will affect British business, which is deeply concerning and justifies my raising the following issues.
	Whether or not consultation was carried out, there has clearly been no assessment of the impact of the amendments on Britain's economic competitiveness. How will the amendments affect our flagship companies? Will the Minister assess the number of jobs that she believes will be affected by companies not relocating here or by companies that are already here relocating elsewhere? On Second Reading, she said that to go further would cost jobs. Which is it?

Margaret Hodge: I am fascinated by the hon. Lady's speech, although she has still not answered my question. However, I will answer her questionnone.

Justine Greening: None was obviously a response to my question about the assessment of the impact of the amendments.

Margaret Hodge: rose

Justine Greening: The Minister will have the chance to respond later in the debate.

Margaret Hodge: On a point of order, Mr. Speaker. I will not interrupt the hon. Lady again unless she provokes me, but she was misrepresenting me. When I said, none, I meant, no jobs.

Mr. Speaker: That is a rebuttal for a later stage. Misrepresentation is a very strong term. The Minister could always say that the hon. Lady was mistaken, which is nicer.

Justine Greening: It is obviously difficult being in this position, as I have asked lots of questions about the amendment and had only one answered. That is why I had to make my best guess at working out which one the word, none, related to.
	Perhaps I may continue with my list of questions. What specific information does the Minister hope to elucidate from directors regarding corporate social responsibility that she did not believe would be disclosed in the business review as it stands? Whatever that information, how has she reached the conclusion that the value of that information outweighs the impact on our economy? The Minister seems to have made this decision with all too little understanding of its real costs and benefits. The best decisions are generally taken with facts and data, but this one was taken so late in the day that there cannot possibly have been a robust assessment of the reasonableness of the amendment or the impact of the decision on our economy and its businesses. If the Minister will not consult business about the impact of the amendment, I can assure her that we will. In betraying the sensible arguments made to support the business review made not only by herself previously but by Lord Sainsbury and by her boss, the Secretary of State, she has done British business, and all those who work for it, a true disservice.
	Let me turn to the detail of amendment No. 821, which is a blunt instrument that largely replicates part of new clause 1. It asks directors to provide in the business review
	information about persons with whom the company has contractual or other arrangements which are essential to the business of the company.
	Most companies will believe that all aspects of their operations are essential; otherwise, they would not waste money and resources carrying them out. A whole host of arrangements could be deemed essentialfrom suppliers to utility, IT and telephony providers, from leasing arrangements for buildings to agreements with local authorities. Do the Government intend that the amendment be so widely couched? Presumably, it would even include financing from banks or arrangements with auditors or the Inland Revenue that are vital for the company's operation. The term, contractual arrangements, requires clarification. It could even be considered to cover customers. For example, Homebase has its Spend and Save scheme, with 4 million cardholders collectively accounting for 40 per cent. of its sales. That arrangement is clearly essential to Homebase, so would it need to be disclosed in the business review? If so, I do not see how that would further the aim of the business review, which I understood was intended to put in place, for the first time, a robust corporate social responsibility framework.
	Will the Minister provide some guidance on the type of information that the Government are trying to bring to the surface? Is it names and addresses? Is it length of contracts, assuming that it is the supplier relationship that the Government are driving at? What is intended to be disclosed by directors? How will members judge whether enough has been disclosed? If it is largely environmental information that is required by members so that they can assess whether the company in which they hold shares has behaved ethically, would not that be part of the existing environmental matters narrative?
	Based on what was reported in the papers today and yesterday, it seems that the amendment is aimed at the supplier side of the business, but that is not how it is phrased. That is worrying for business, and for us. Surely important supplier relationships that had an effect on the company's environmental impact, or an effect in relation to the local community, would be included in the environmental matters or social and community issues aspect of the report, so why introduce the amendment at this late stage? The business review as structured already provides a mechanism for catching such important aspects of business operations, but the Government, in tabling the amendment, are casting doubt on that. As a result, they are, at the very last moment, managing to snatch defeat from the jaws of victory.
	The amendment will add costs to companies in terms of compliance and related legal advice and guidance. That is not my assessment, but that of the CBI.

David Howarth: Does the hon. Lady accept that new clause 2, which would restore the reporting standards part of the original operating and financial review, would answer all her questions?

Justine Greening: We cannot support new clause 2, because it would relegate the business review to a tick-box exercise, with the unacceptably high risk that it would be of poor quality.
	Worst of all, the amendment could put some companies at risk, because the information that they are required to disclose, while having no relevance whatsoever to corporate social responsibility reporting, may give out vital commercial information. I am surprised about that, given the example of Huntingdon Life Sciences. Companies working with or supplying that company, and its customers, have been targeted through no fault of their own having carried out perfectly legal operations. Other companies will be worried by the danger in which the amendment puts them. That potentially negative impact cannot be in the interests of the members of the company for whom the report is ultimately intended, nor in the interests of the company's employees. Surely that is not what the Government intend. Leaving aside the atrocious way in which they have introduced the amendment, even worse is how it weakens the business review by detracting from its focus on corporate social responsibility and its main function as a report to the members of the company so that it becomes a much broader report for a much broader audience. Until now, the Minister had always said that that was a dangerous road to take.
	Let me turn to the issues raised by the hon. Member for Hemsworth (Jon Trickett). I fully appreciate what hon. Members are trying to achieve in new clauses 1, 2 and 75, but I have some concerns. Widening the purpose of the business review to expand its remit so that it is not only for existing members but for potential investors and customers would weaken, not strengthen, it. The review is designed to be a core narrative on the company, which may include a warts and all assessment by directors in which they consider difficult challenges that lie ahead. Many companies are in industries which, by their nature, have a big impact on the environmentfor example, aircraft operators. Surely the most valuable business review for members will be one in which directors can set out not only their successes but their failures and future challenges regarding corporate social responsibility. It is vital to cover aspects where things are not going well if we are to see an overall improvement in this field.
	The danger of widening the business review's purpose from being a narrative for members to one for potential investors and customers is that it will stop being a narrative and start to become a sales brochure in which, like it or not, positives will be accentuated and negatives may risk being downplayed. Directors may ultimately face a conflict of interest between producing the best business review for their members and the best business review for a broader audience. The review exists to enable members to hold directors to account. It is a powerful tool and we should not weaken it, which amendment No.821 and the new clause risk doing.

Jim Cousins: I remind the hon. Lady that every British company that is listed on the American stock exchanges must, according to American legal requirements, produce a 20F statement, in which it sets out all the legal, regulatory and statutory challenges that it faces. Would not it be reasonable for us to require that of British companies?

Justine Greening: If such a requirement does not help to achieve the Bill's objectiveI do not believe that it doeswe should not include it. As someone who was involved in the audit profession, I know that, in the US, a tick-box mentality prevails and has led to a proscriptive audit approach, whereas the UK's audit approach continues to be based on the substance of transactions, and auditors judging what is true and fair. The latter is a much stronger framework and I believe that we can be satisfied with the UK corporate environment and corporate governance when compared with the position in which US corporate governance has sometimes found itself in recent years.
	Defining who would constitute a potential investor or customer in practical terms is such a broad concept as to be impossible to tie down meaningfully. In the case of a highly diversified company or a company that sells a wide product range, potential investors could have a variety of priorities that they wanted to highlight in a business review, and a vastly differing range of understanding of the company. Companies with a huge product range could have so many products that almost anyone could be classed as a potential customer. That is unworkable in the context of the business review.
	Perhaps one of the most fundamental changes that the new clause proposes is the requirement for medium-sized companies to complete a full business review. Conservative Members believe that that would be excessively onerous, especially taken with new clause 2 and new clause 75, which deals with reporting standards and auditing the business review.
	The Government estimated that the operating and financial review audit would cost business 33 million. I am concerned that formalising reporting standards, as new clause 2 proposes, and requiring an audit of the business review, as new clause 75 proposes, would risk transforming the business review exercise into nothing more than a tick-box approach, whereby the quality of the substance of the business review took second place to ticking all the boxes of a reporting standard.
	Clause 510 provides that auditors must review whether the directors' report is consistent with the accounts as a whole. The Bill therefore already contains a safeguard to ensure overall consistency. I am sure that hon. Members know that the Accounting Standards Board had prepared a robust reporting standard to use alongside the OFR. Once the OFR was amended and downgraded to a business review, the ASB similarly downgraded the reporting standard to a reporting statement. Nevertheless, it still provides clear best practice guidance to directors and their auditors on the expected content and quality of the report and can therefore provide some quality assurance in the business review narrative.

David Howarth: Surely the hon. Lady cannot have it both ways. She cannot on the one hand say that reporting standards will lead to a tick-box approach and on the other praise the reporting standard that the ASB produced.

Justine Greening: I am amazed. There is a touch of irony to a Liberal Democrat saying that I want to have it both ways. In the House of Lords, the Liberal Democrats were happy with the business review, as we discussed in Committee, but by the time the Bill reached the House of Commonsa matter of weeksthey were resolutely claiming that we needed the OFR back. We want an efficient, effective minimum regulation approach to the business review that will enable companies to get on with good quality corporate social responsibility reporting. We do not want to force them down routes that they may not find valuable.
	Surely providing some flexibility is a better approach, especially given that we may debate a climate change Bill shortly, than tying the review down so tightly to lists of requirements for inclusion that there is no flexibility to adapt as the agenda changes and grows.
	Conservative Members want a climate change Bill to be included in the Queen's Speech. We are disappointed that, at this late stage, the Government have changed their mind on a business review about which all key stakeholders had largely agreed. That is representative of a Government who are weak minded, badly organised and listless. We will oppose the Government amendments and new clause 1. We look forward to working with environmental groups and business in the coming months and years on the important matter of corporate social responsibility to ensure that the business review proves successful in establishing a robust corporate social responsibility framework in the UK.
	Many other hon. Members want to participate, so I shall end my remarks.

Michael Meacher: I commend the hon. Member for Putney (Justine Greening) on her opening speech from the Conservative Front Bench. Her initial remarks led me to believe that she would be consensualI was looking forward to more such speechesbut her later remarks made me doubt it. However, we look forward to hearing her arguments in future.
	I support new clauses 1 and 2, which my hon. Friend the Member for Hemsworth (Jon Trickett) moved so eloquently and persuasively. They require companies to produce a business review, which examines the impact of company policies on not only the environment but employees, the local community and suppliers.
	There is a long history to the proposals. It has long been understood that the best way to get industry fully to understand and tackle its social and environmental impacts is to require companies to measure and report on them. One cannot manage what one cannot measure. The Government therefore rightly initially drafted legislation in the form of an operating and financial reviewor OFR as everyone fondly knows itand required the leading 1,000 companies to produce one. A dispute then occurred about whether it was right to require those companies to report on their impacts unconditionally or only those that were material to the interests of the company.
	The Government went to extreme lengths to resolve the matter. They set up an external committee to advise them on the definition of materiality. I believe that they did that to get agreement and, after due discussion and considerable delay, agreement was reached and a consensus achieved between the Department of Trade and Industry, the Department for Environment, Food and Rural AffairsI know that because I was thereand the business and investment community. However, last December, the Chancellor suddenly announced at a CBI dinner that he was shelving the OFR legislation. There was no consultation about the abrupt U-turn and the reasons that were given at the time to justify it do not bear examination.
	It was argued that the statutory OFR was a prime example of gold-platingthe normal argument that Whitehall and the CBI useEU legislation. The Chancellor said that it went beyond the requirements of the 2003 accounts modernisation directive. However, the OFR proposals predated the EU legislation by several years. Indeed, the OFR package was amended in 2004, but that was simply to ensure that it complied with the EU directive, not to enable it to go beyond it. Nor was the sudden shelving of the OFR legislation universally welcomed by industry. One had only to look at the  Financial Times during that period to see a letter of protest from the Institute of Directors, no less.
	It is highly relevant that, more recently, top executives from among the 14 largest FTSE companiesthe list reads like a roll-call of the senior ranks of British industryheaded a delegation to the Prime Minister to demand that the Government regulate against climate change. I was delightedif slightly surprisedby that. It showed, in contrast to the rather curmudgeonly remarks of the hon. Member for Putney about the attitude of British business, that those attitudes are beginning to changeand not before time.
	I suspect that that is the reason the Government are nowin another excellent developmentconsidering producing a climate change Bill in the next Session. I very much welcome that, as someone whoalong with the right hon. Member for Suffolk, Coastal (Mr. Gummer) and the hon. Member for Lewes (Norman Baker)is sponsoring a climate change Bill before Parliament that will require an annual 3 per cent. cut in greenhouse gas emissions in order to achieve what the scientists say is necessary to stabilise climate change, namely a 60 per cent. reduction in those emissions by 2050.
	For the purposes of this debate, the key pointwhich we recognise in our Bill and I hope that the Government will recognise in their climate change Bill if it is forthcomingis that, in order to meet the unquestionably demanding targets, it is necessary to make regular measurements, sector by sector. That includes transportation, industry and the domestic sector. The measurements must also be made on a company-by-company basis. They must ascertain whether the targets are being met and, if they are not, determine what remedial action needs to be taken to get back on track. That is why the business review, as it is set out in the new clauses as a replacement for the lamented OFR, is absolutely essential.

Elliot Morley: My right hon. Friend rightly drew our attention to the excellent points that the Corporate Leaders Group made to the Prime Minister. The Minister has also received a letter from the Aldersgate Group, of which I am a member. The group includes leading businesses that want to promote sustainable development, and to see the establishment of reporting in relation to carbon allowances. Would the Minister for Industry and the Regions like to touch on that letter when she responds to the debate, and tell the House how those reports can be incorporated? That matter certainly seems to be addressed in new clause 1.

Michael Meacher: I am sure that my right hon. Friend the Minister will respond to my hon. Friend's request. The members of the Aldersgate Group, like others in the senior ranks of British industry, realise that that is the direction in which the international economy is going, and that, if we are to be smart, we need to be in there at an early stage, because, unquestionably, there will be a requirement to produce such a review in due course. This is not only a matter of environmental sensitivity but a good business move in relation to the bottom line.
	The method adopted by the EU emissions trading system under the Kyoto protocol, which is highly relevant to the debate, is the national allocation plan. This requires each industry to reduce its emissions to a fixed lower level within a given time scale. The relevance of that is that the new clauses provide the framework by which those reductions can be achieved in two important ways. I am at one with my hon. Friend the Member for Hemsworth in strongly requesting the Government to reconsider their position on this. First, the national allocation plan, to which we have signed up, applies to all large and medium-sized public and private companiessome 36,000 in all. That is still fewer than 1 per cent. of all companies, but it is significantly more than the 1,300 publicly listed companies covered by the Bill as it is drafted. The Aldersgate Group and the 14 key representatives of the big companies who went to see the Prime Minister are all concerned about the need for a level playing field. They do not want to be disadvantaged, and they therefore expect there to be a general requirement for the whole of business, including large private equity firms and foreign-owned private subsidiaries. The new clauses cover such businesses, but the Bill does not.
	Secondly, the new clauses would introduce a mandatory reporting standard. I strongly suggest that that is absolutely essential, because we have repeatedly tried to make voluntary codes of practice work. As a former Minister for the Environment, I speak with some anguish about this. We introduced a number of voluntary codes, but they were honoured more in the breach than in the observance. Voluntary codes of practice will never be observed, other than by a relatively small number of scrupulous and conscientious companies. They will certainly not be universally observed. If we want to establish a level playing field, the code of practice must be mandatory and universal.
	There is also the question of placing burdens on business. We have only to open the papers today to see the CBI repeating its usual mantra. Even the hon. Member for Putney could not resist buzzing around it. Of course there is an initial outlay involved in meeting the proposals. The truth is, however, that having spent that relatively small sum, companies will start to measure their energy efficiency, their transport impacts, their waste generation, their water consumption and their greenhouse gas emissions. They will then find, perhaps to their surprise, that once they have measured the waste and inefficiency that they were inadvertently generating, they will be able to make disproportionately larger savings. That is the key point: they will get a far bigger return for their initial outlay if they are required to assess the environmental impact of their work.
	Proof of that can be seen in the fact that mandatory social and environmental reporting is already being pursued in various forms in other successful competitor countries to our own, including the United States, Canada, France, the Netherlands, Norway, Sweden and Denmark. I must underline strongly that sustainability is the friend of competitiveness. It is not a burden on it. For all those reasons, I hope that the Government will reconsider their position and accept new clauses 1 and 2. This would result in a win-win situation, not only for the environmentimportant though that isbut for the bottom line.

David Howarth: It is a great pleasure to follow the right hon. Member for Oldham, West and Royton (Mr. Meacher), who speaks with great authority on these matters. Perhaps I should say to the hon. Member for Putney (Justine Greening) that this is the stage at which the real Opposition get to have their say.
	The right hon. Member for Oldham, West and Royton related quite accurately the history of how the operating and financial review was abandoned. It is alleged that the Chancellor decided to announce, without much consultation with anyone, that the OFR was to be suppressed because he wanted to make a symbolic gesture to show that the Government were willing to deregulate in matters that affected big business. That move was so surprising because, first, it was not clear that big business wanted that gesture to be made and, secondly, because we are talking about serious matters, not just symbols.

Justine Greening: I am slightly perplexed by the hon. Gentleman's comments about being the real Opposition. Will he oppose Government amendments Nos. 821 and 822?

David Howarth: Of course not, because the Government are giving way on a point that we are urging them to give way on. We are therefore very glad that they are doing so, and it would be perverse of us to oppose them. We are going to support that proposal. I accept that there are concerns about how it has been introduced: this is a surprisingly late concession, but late concessions are better than none at all.
	In addition, it is not surprising that a concession has been made, because this matter was included in the original OFR. Furthermore, there was a clear argument that the drafting of the original clauseit talked about all the matters that were material to the company's positionby implication included supply chain matters. There is a problem over late concessions, but it is a rather lesser one than would normally apply.

Shailesh Vara: With respect to the hon. Gentleman's claim that he speaks for the real Opposition, perhaps he would like to explain to the House why, in Committee, his party either abstained or, on several occasions, voted with the Government when the official Opposition voted against them.

David Howarth: As I remember it, at that stage the official Opposition opposed even the business review, although they appear to have changed their position, presumably due to the election of the right hon. Member for Witney (Mr. Cameron). The inconsistency of the Opposition's position needs to be explained.

Shailesh Vara: Is that the hon. Gentleman's Opposition or the other Opposition?

David Howarth: The hon. Gentleman's question, asked from a sedentary position, shows that it is a big issue in the House as to which party is the real Opposition.  [Interruption.] I want to make progress.
	The question is whether the business review that emerged from the row that blew up after the Chancellor removed Government approval for the original OFR goes far enough. That is what new clauses 1, 2 and 75, as well as our amendment (a) to new clause 1, are about. The business review is too narrow in a variety of ways, and the right hon. Member for Oldham, West and Royton mentioned them all. In particular, it covers too few companies for the purposes for which we think it should be created. It does not cover the supply chain issue, although the Government have rightly introduced a proposal to correct that position.
	Most important for us is the fact that the new business review fails to have proper audit requirements. There is a general requirement of audit, as the hon. Member for Putney mentioned, but what is not contained in the business review, which was contained in the original OFR, is a requirement for auditors to report on matters that come to their attention that are inconsistent with what is in the business review. The wording that we have used in new clause 75 is precisely that which was in the original OFR regulations.
	I suppose that it is fair to say that our starting point, and our reason for supporting new clauses 1, 2 and 75, is perhaps rather different from that of the Government and the Conservative party. We are interested not just in the risks that the company faces, from loss of reputation through to introducing policies that are environmentally unfriendly or socially irresponsible, and unwelcomefrom its point of viewregulatory activity, but in helping to create a market for ethical investment and ethical consumption. That precise point is where we differ from the other parties, because that is our first concern as to what the business review should contain and how it should work.

Justine Greening: The hon. Gentleman talks about creating an ethical market. Does he agree that there is already one established, although developing it is clearly something to be encouraged?

David Howarth: Yes, I was coming to the size of the market. Ethical investment has probably got much further than ethical consumption, but even ethical investment is still not fully developed. Last year, ethical investment went through the 10 billion barrier for the first time. That sounds like a lot of money, especially compared with gross household savings, which are about 40 billion. However, a lot of the funds moving into ethical investment are moving from existing investment funds, so the percentage of new investmentnew saving going into ethical investmentis rather less than the quarter it appears to be.
	On the ethical consumption side, matters are far less well developed than that. A report by Co-operative Financial Services found that a third of UK consumers claim to be concerned about ethical consumption, yet only about 3 per cent. of the UK market for goods and services is clearly ethical in its production methods and aims.
	We believe that ethical investment and ethical consumption have great power. They have the potential to change the world. The hon. Member for Hemsworth (Jon Trickett) talked about ending capitalism. We on the Liberal Democrat Benches take the traditional Keynesian view that our job is to make capitalism work for better ends. As Keynes said, eventually he knew which side of the barricades he would be on, but nevertheless capitalism has to be reformed if it is to be worth continuing.
	One problem, as we see it, is ethical consumers and ethical investors finding out whether the information out there about the behaviour of particular companies is believable, accurate and true. We believe that an expanded business review, especially with an audit requirement, would help those customers and investors to find out where their ethical pounds would be best placed. In that process, audit is crucial. That, again, is where we differ very strongly from the hon. Member for Putney.
	Our view is that, without proper audit, the business review will turn into a marketing tool. Already, a large number of companies give the impression that they are environmentally and socially responsible, but not all their claims can be taken absolutely at face value. All too often, companies already do precisely what the hon. Lady said they would do if the audit requirement was introduced. They highlight isolated examples of good practice, but fail to mention the full picture.
	Our view is that there is a threat in current unaudited practice to the whole ethical investment and consumption market. It would be a great shameeven a disasterif corporate attempts to greenwash operations led to public distrust and cynicism about the process of ethical investment and consumption. The auditing of claims made in business review reports would help to concentrate the minds of those who write them and increase the trustworthiness of the information that they give.
	As the right hon. Member for Oldham, West and Royton said, the better companies would welcome that, because they would then receive the advantage they deserve over the companies that are interested merely in public relations, not in thoroughgoing ethical behaviour.
	If the opportunity arises, we would like to press new clause 75 to a vote. It is independent of the success of new clauses 1 and 2. Even if those new clauses are not accepted today, although we hope they are, it will remain true that the audit requirement in the original OFR should be put back in place in the business review that the Government, at this stage, want to establish.

Colin Burgon: I wish to speak to new clause 2, which completes the circle and complements new clause 1, which was moved by my hon. Friend the Member for Hemsworth (Jon Trickett). Our new clauses combined have the backing of more than 50 Labour Members and I think that I am correct in saying that they have sizeable support among Liberal Democrat and nationalist Members. More importantly, they have the support of the Trade Justice Movement and the Corporate Responsibility Coalition, which, I am told, together represent more than 130 civil society organisations. I pay great tribute to those organisations for the campaign that they conducted across the country. I do not wish to sound pompous, but I hope that most right-minded members of the British public support the new clauses, too.
	New clause 2 is rather like me and my politics: it is modest, thoughtful and rational. It is linked to this timely Bill, which is the biggest in parliamentary historyit has more than 1,200 clauses and was eight years in the making. The Bill goes a long way towards setting reasonable standards on corporate social responsibility, which the country, the environment and the world desperately need. I sincerely congratulate the Government on their efforts to produce forward-thinking legislation. Some Members, and perhaps some exhausted Clerks and Officers of the House, may question the necessity for further amendments or new clauses to a colossal Bill, so I shall explain why we introduced our new clauses. I always try to keep my contributions brief and incisive, and I shall endeavour to do so today.
	The right hon. Member for Witney (Mr. Cameron) and the hon. Member for Huntingdon (Mr. Djanogly), who spoke on behalf of the Opposition in Standing Committee, have both praised BP's environmental record, so the company provides a relevant case study. BP was praised for taking corporate social responsibility very seriously, but that is qualified by the fact that the company spends a significant amount of money on selling its CSR reputation. That is part of a much wider problem. All too often, companies spend vast sums of money projecting a positive image of themselves as green or ethical organisationsit is obviously not only political parties that do soand do not spend enough money or time on the real issues that we aim to deal with under the Bill. Those are issues of shaping, guiding and ultimately changing the behaviour of the transnational companies whose activities have an extremely serious impact on our environment, climate and communities.
	Hon. Members on both sides of the House regularlyand rightlyvoice concerns about climate change and our environment, and several Members have already alluded to the subject. For many people, that is the central challenge of our times, and that belief is shared by the wider public. To refer to my case study, in the past financial year, only 5 per cent. of BP's investment went into alternative energy. By comparison, 72 per cent. went into fossil fuels. That puts it only slightly ahead of competitors such as Shell. As one of Shell's shareholders, and as a representative of a party that is going green, the hon. Member for Huntingdon may wish to raise that with BP's directors at an appropriate time.
	Regrettably, BP has been associated with a range of what can only be classed as negative environmental impacts and human rights abuses, from the Baku-Ceyhan pipeline to the Alaskan oil spill. This summer in Texas, the Rev. Jesse Jackson led protests against BP over price-fixing, employment discrimination and health and safety violations, following the Texas City explosion. In fact, BP has one of the worst records for health and safety in the US oil refinery sector. Moving down the continent, in July it settled a court case with a group of Colombian farmers who were forced off their land by paramilitaries so that BP could build a pipeline.
	By way of comparisonI want to be even-handedShell's corporate social responsibility record causes equal consternation. Shell, too, is a big spender on the generation of positive PR, but it is less energetic in making attempts to moderate the negative impact of its commercial activities in the countries and communities in which it operates. For instance, the exposure of Shell workers to toxic pesticides in Brazil has resulted in severe medical problems for the work force. Shell has been forced to take steps to protect workers, but it still will not guarantee treatment for conditions that have developed as a result of that toxic exposure. Its joint venture in Port Arthur emits massive quantities of toxins known to damage human cardiovascular and respiratory systems. Some 80 per cent. of Port Arthur's residents suffer from heart conditions and respiratory problems, whereas the regional rate is 30 per cent. among people who do not live near an oil refinery.
	Those are negative examples from just two companies. They have been sourced and exposed through local legal challenges to the companies in question, and thanks to the endeavours of environmental NGOs. Of course, we cannot make meaningful, objective comparisons between companies such as BP and Shell because neither is forced to report on their activities in a manner that conforms to a level, comprehensive standard that can be easily understood by everyone. That is the crux of my argument. The examples that I have given show how irresponsible behaviour can damage the long-term interests of the company, its customers and shareholders. Companies must understand those factors if they, in turn, are to understand their position and its risks.
	A central plank of the Bill is that, through reporting obligations, shareholders and investors can vote with their wallets and choose not to invest in unethical or environmentally irresponsible companies. Self-evidently, that is worth while only if companies are forced to publish things that they do not want to publish. At present, I understand that there are up to six sets of voluntary reporting guidelines that companies can consult for an indication of what non-financial information to include in their reports. That is exactly why we need a common, mandatory and auditable standard of environmental and social reporting, so that we can cut through the spin and make a judgment on the substance.
	To some extent, what the Bill overlooksand what Her Majesty's Opposition fundamentally misunderstand when they talk about CSR being a unique selling pointis that CSR is what companies do, not what they represent, report or claim to have done. It is not about what they say, but about what they do. New clause 2 would allow customers and shareholders to judge the situation objectively. If it was accepted, it would require reporting standards in business reviews to be set by a relevant body, and compliance with those standards would mean compliance with the requirements of the Bill.
	The lack of a reporting standard is perhaps the most glaring gap in the Bill. The original operating and financial review regulations were accompanied by such a standard, issued by the Accounting Standards Board, to provide companies with guidance on what information they should include. The standard was intended to be a clear template, setting out the types of key performance indicator that could be used by companies to ensure that they complied with the law. The new clause would introduce similar mandatory standards for the business review. That is an issue of major importance for the Corporate Responsibility Coalition, the Trade Justice Movement and the many Labour Members who believe that mandatory guidance is essential to ensure that the information in business reviews is meaningful and comparable across companies, down the years.
	Standards help to reduce businesses' compliance costs, and they have been called for by a number of other stakeholders in the debate, including the Chartered Institute of Management Accountants. Without such a provision, it will be the responsibility of the directors of each company to determine the content of the business review and what indicators to use. That would make it impossible to compare one company with another, or the same company's performance year on year. Shareholders would not be able to assess how their company is performing compared with its competitors, or whether its performance is improving over timeI would have thought that that was self-evident. Without being able to do so, it will be difficult to judge how directors have performed their duties. The absence of reporting standards thus undermines the whole concept of enlightened shareholder value as enshrined in the heart of the Bill.
	It would also be useful for directors to have a clear benchmark and a model to follow, so that they can be confident that they are compliant with the law rather than competing models, which can result in confusion. The new clause, tabled by me and about 50 other Members, allows reasonable latitude in framing the reporting standard, which should address concerns that too strict a reporting standard will place too heavy a burden on businesses and could deter business growthan argument we hear a great deal. As we have seen with other European nations, such as Sweden and Denmark, that is patently not the case. Allowing complete freedom to directors to decide how they report goes too far in a direction that, in my view, is wrong, and undermines the entire concept of reporting and its role in delivering enlightened shareholder value.
	This is an historic opportunity to make a decent Bill better, at a time when the ramifications of its details have never been more important in Britain and, I would argue, throughout the world. I especially commend the new Government amendments on business-supplier relations, which improve the Billthe fact that the Conservatives oppose them means that we must have got something right. I ask my right hon. Friend to re-examine how we might seize the opportunity to consider mandatory standards to the benefit of all interested parties, including the business community. Will she seriously consider, mindful of the Bill as it currently stands, how companies could be encouraged to comply with the suggested voluntary guidance? Statutory standards would, of course, present consequences to companies who fail to adhere to them. Is not a voluntary code by definition rather toothless, unless there is at least some level of supported implementation? Does she actively recommend to companies full compliance with any voluntary guidance? How robust does she expect her outstanding powers of persuasion to be? Furthermore, if, within a set period, companies were seen not to be complying with the voluntary code, would my right hon. Friend set a time frame to reconsider the option of mandatory standards if the law proves to be impotent, in consultation with business and the various NGOs?
	As the excellent little pamphlet from the Trade Justice Moment and Corporate Responsibility Coalition states:
	The Bill provides Parliament with an unmissable opportunity to put in place a legal framework, which ensures that UK companies are fit for the 21st century, combining successful enterprise with ethical and responsible corporate behaviour. But to achieve this, the Bill must be amended further and a bolder approach is needed.
	I wait on the words of the Minister.

Adam Price: It is a privilege to follow my hon. Friendfor the purposes of this debatethe Member for Elmet (Colin Burgon) and to support new clauses 1 and 2. I pay tribute to him and his hon. Friend the Member for Hemsworth (Jon Trickett) for giving voice in the House to the hundreds of thousands of citizens who have led one of the biggest letter-writing campaigns that I have seen while I have been in the House.
	Given that enormous campaign, it seems clear that the introduction of statutory standards for environmental and social reporting is an idea whose time has come. When we consider that the joint stock corporation, as it used to be called, or limited liability company has been around for 200 years, this Bill and these amendments make a small, modest step towards restoring the balance of power with regard to the rights and responsibilitiesto use the well-worn new Labour phraseof corporations. For too long, companies have operated in a privileged twilight world beyond the reach of accountability. We have heard a lot of debate about veils recently. This Bill and the amendments are about lifting the corporate veil and providing not just shareholders, but for society as a wholeemployees, communities and campaign groupswith reliable, up-to-date, accessible information about corporate responsibility and the impact of companies on society.
	During the 200 years in which corporations have existed, their power has waxed and, unfortunately, democratic power has waned. In terms of the broader context of the Bill and these amendments, it is therefore essential that we hold companies that have such an impact on our society and the world as a whole to account for their actions. After all, many of the ills faced by society today, whether environmental degradation or social injustice and inequality, do not stem from governmental action or inaction but from corporate irresponsibility. Therefore, the Bill and these amendmentsI welcome the Government's concessionsrepresent an important step in the right direction.
	I would go much further. The whole issue of limited liability is problematical. I am in good company here, because Adam Smith was against the whole notion of providing shareholders with a get-out clause. In this case, therefore, the hon. Member for Hemsworth is, unfortunately, to the right of Adam Smith, for the time being. The problem was captured famously by Edward Thurlow, a Lord Chancellor in the 18th century, who said that the problem with the corporation was that it had
	no soul to be damned and no body to be kicked.
	In that phrase, he captured the problem of holding companies to account through the courts and legal system, and the problem of the human beings who own and run companies. Even where companies are found guilty of environmental degradation, it is difficult to hold individual directors or executives to account, unless one can demonstrate that they were directing minds.

Michael Fabricant: I have been following the hon. Gentleman's points with considerable interest, and I also regard him as my hon. Friend. Things have moved on a great deal since the 19th century. It is ironic that tomorrow morning, at 9 am, a Standing Committee will sit on the Corporate Manslaughter and Corporate Homicide Bill. Therefore, there is accountability now, and there will be even greater accountability once that Bill becomes law.

Adam Price: And all the angels in heaven rejoice when one sinner repenteth. The fact is that that Bill demonstrates the emerging consensus in society, which is more important than the consensus in this place. That consensus is for greater accountability with regard to corporate power, which, whether we like it or not, is central to the way we organise ourselvesit is the governing social form.
	On the issue of voluntary codes on corporate social responsibility, the hon. Members for Elmet and for Hemsworth made the point strongly that companies will often give a very good story on CSR. Some consultants are making a very good living out of CSR. But beware the veiland in some cases, unfortunately, the maskof corporate social responsibility. As Andrew Pendleton, senior policy officer of Christian Aid, said:
	Some of those shouting the loudest about their corporate virtues are also among those inflicting continuing damage on communities where they work.
	That is why we need these amendments.
	The concession is welcome because, clearly, there is a problem in the complex world of corporate power, where there are joint venture companies, subsidiary companies and all kinds of complicated relationships. It was therefore important to get the amendment on suppliers and subsidiary companies. We have had particular problems with asbestos-related cases in the past, where companies have tried to avoid accountability through Russian doll-like subsidiary companies across the globe. The underlying message in the amendments is that society predated the joint stock corporation. Those companieswhich were time-limited back thenwere given a licence to operate by society, and we create the conditionsthe legal framework and the transport infrastructurein which they can make their profit.
	It is entirely acceptable to demand what the new clauses demandstatutory minimum environmental and social reporting standards. Companies must be accountable not just to their shareholders and employees, but to the wider society in which they operate.

Alun Michael: I congratulate my hon. Friend the Member for Hemsworth (Jon Trickett) on the sensible and coherent way in which he introduced a very important debate. I also congratulate the hon. Member for Putney (Justine Greening) on the style of her maiden Dispatch Box speech. Unfortunately, it demonstrated the essence of the new Conservatives' policy, which is to agree with Labour proposals, attack the Labour Government, and have no ideas of their own. It is also clear that the hon. Lady has no conception of the iterative process over the past eight years that has engaged business and, indeed, all other stakeholders, in a creative and constructive process. As I know from the comparatively short period during which I have been involved, it has been far more than consultation; it has been very full engagement.

Justine Greening: Will the right hon. Gentleman give way?

Alun Michael: Many of my hon. Friends wish to speak, so I shall keep my remarks very brief.
	The speech of my hon. Friend the Member for Hemsworth touched on issues in which I have taken a passionate interest for many years. The only public meeting that I held at the time of the last general election was on the theme Poverty is political, linked to the need to tackle poverty worldwide. I have been involved in fair trade issues for many years, and ministerial experience has taught me a great deal about how to make sustainable development a reality.
	Freedom from ministerial responsibilities allows me to take part in the debate, and to say frankly and openly what I think about the issues. I want a business environment in which the long-term interests of a company include consideration of its responsibility to people and to the environment, but I cannot support new clause 1 because I do not believe that it will have the desired effect. I agree with my hon. Friend about the ends, but great care must be taken with the means.
	My hon. Friend spoke of protecting the public interest and of the need for a light touch. He observed that corporate social responsibility was now taken seriouslyand it is, because the environment has changed. I support the Government amendments because they respond to an aspect of our debates on these issues, but the new clause would introduce a serious bureaucratic burden without achieving the desired results. Surely we should all want the whole of business to be both successful and responsible, and the new environment of enlightened shareholder value encouraged by the Bill will have a major impact in that regard. The balance of success and responsibility is built into the Bill very carefully. In my view, the hon. Member for Cambridge (David Howarth) is wrong: a tick-box mentality is more likely to result in a PR tool than to encourage a positive change in the environment.
	The Bill embodies other important principles, such as Think small first, which has been seven years in the making. The new clause has good intentions, but in practice it embodies the principle Think bureaucratic first. It introduces a dangercompanies will be advised by lawyers and they will play safe, not in protecting sustainable development, but in bureaucratic activity, producing more paperwork rather than public benefit.
	Gibbon has warned us that laws often fail to prevent what they forbid. I suggest that bureaucratic regulation often fails to achieve the desired outcome. There can be perverse, unintended consequences. What enlightened shareholder value does is allow more citizen engagement in how companies operate. Those of us who care about issues such as sustainable development and fair trade, and wish to combat exploitation, surely want an environment in which the citizen campaigner is complemented by the citizen consumer. We can now go into a shop and see half a dozen different fairly traded coffees, which was not the case a few years ago. We also want the citizen shareholder to have an impact. What we want is not a tick-box environment, but intelligent engagement by companies. That is where I agree with the hon. Member for Putney. The Bill retains true and fair as the accountancy standard, for instance, which is extremely important.
	I believe that enlightened shareholder value will allow organisations in the Corporate Responsibility Coalitionthose who want to campaign for trade justice, environmental protection and the restto continue an intelligent engagement with business that has helped to increase responsibility in terms of sustainable development and international accountability in the United Kingdom, while at the same time making the UK a better place in which to do business. Surely there are lessons to be learned from our success in recent years in encouraging small companies to promote entrepreneurship.
	There may be things that companies should do to a greater extent in order to carry out their responsibilities, but some of them should be contained in employment, environment or health and safety legislation rather than a Bill that is concerned with the vehiclethe company. Moreover, there is nothing to prevent companies from reporting in a way that is not required by law if that proves useful to shareholders for reasons of transparency. It would be good for their reputations, demonstrating that they were working responsibly.
	Let us continue the partnership between Government and business and, indeed, the organisations that have campaigned for improvements. Let us think small first. Let us work on the application of enlightened shareholder value, which is making the UK a good and progressive business environment. Let us not go down the heavy-handed bureaucratic route that I fear is being proposed, although not intentionally, in the new clause and amendments.

Lorely Burt: I had the privilege of sitting through the entire Committee stage, and, as a non-legal person, I now know more than I ever really wanted to know about company law. Only yesterday, we were treated to a fascinating discussion on corporate sole.
	Some Conservatives made extremely negative remarks yesterday about the Minister's unhelpfulness in terms of accommodating input from other Members. Although in my view the amount of time allocated to Report could and should have been greater, some shameful remarks were made by Conservative Members who had not had the benefit of experiencing the Committee stage. I find myself in the unusual position of defending a Minister by seeking to put the record straight. The Minister did consult, and she did accommodate helpful suggestions and proposals from Liberal Democrats, Labour Members and those in other parties.
	Even the Minister, however, has been unable to accommodate the wish of both Labour and Opposition Members to retain the operating and financial review. It was certainly not her fault that her boss-to-be, the Chancellor of the Exchequerin a moment of madness, and apparently without consultation with any of his parliamentary colleaguesmade a rash promise last November which he thought would appease big business. I refer to his promise to scrap the OFR.
	The Chancellor thought that he would please business. In fact, he has angered many first-class businesses that had already begun to incorporate the requirements of the OFR in their business reporting. A report in today's  Times estimates that just under 50 per cent. of top UK companies have done so. I cannot agree with the hon. Member for Putney (Justine Greening) that the OFR is a waste of time, and apparently those companies do not agree with her either. Meanwhile, we are left with the somewhat weakened imitation that is the business review.
	New clauses 1 and 75 seek to stiffen the requirements of the review and make it more effective. The hon. Member for Hemsworth (Jon Trickett) made many of the relevant points very eloquently, and I shall not elaborate on them, because we are short of time.
	I am grateful to the Government for giving way on the issue of the supply chain. Any company can purport to be acting ethically, but if a company employs child labour or pollutes the environment, ethical investors and many others will wish to know about it.
	Our amendment to new clause 1 is designed to widen the scope of the review to accommodate ethical investorsthat growing band of individuals who base their investment decisions at least partially on the ethical behaviour of the company. That is hugely important. Clearly, that type of investor cannot make informed decisions if the information is not there; they cannot make them based on pious words or spin. New clause 75 gives auditors the power to check the accuracy of the report and provides for a duty to report any anomalies, specifically with regard to the contents of the business review.
	That requirement will provide two things of great value to companies. First, it will create a level playing field for all companies of the same size. Those that behave in a way that is inconsistent with the spin in the business review will, I hope, be found out. Secondly, ethically behaved companies will attract investors who demand reassurance that their profits have not been created at the expense of others, or of the environment.
	What of the cost? When the Chancellor made his fateful statement, wiping the operating and financial review from the expectant statute books, he was clearly seeking to ingratiate himself with business by appearing to be a man keen to reduce regulation and reduce costs. He should know about costs, Mr. Deputy Speaker. British Chambers of Commerce has estimated the cumulative cost to business of implementing new Government regulations since this Government came to power at 50 billion. The cost of implementing these proposals, over and above the existing regulatory impact assessment, is only an additional 30 million. If the Government were to approve an extension to all large private companies, the cost would be an additional 144 million. I am sure hon. Members would agree that that amount pales into insignificance in comparison with the huge burden already imposed by the Government.

Justine Greening: rose

Lorely Burt: I am sorry, but we are running out of time.
	This cost has the huge benefit of creating a level playing field for competitors to give an accurate picture of how revenue and profits have been achieved. That, in turn, will affect the perception of their product or service to customers and investors alike. It is a virtue on which the company literally can trade. I therefore respectfully request hon. Members to support new clause 1 and new clause 75.

Austin Mitchell: I shall speak briefly in support of new clauses 1 and 2, but I also want to speak to some other amendments tabled by myself and my hon. Friends. They further the same principle of keeping companies accountable by reportingin other words, by asking them to say what they have done in certain areas. The sort of reporting envisaged in amendments Nos. 801 and 820, which we are proposing, cannot be subject to the usual Tory accusation that while companies spend millions on public relations, telling us what they have done, any expenditure on reporting to tell us what they have done is likely to put people out of work and cause companies to flee to some other jurisdiction. The amendments escape that criticism.
	Amendment No. 801 tackles a basic issue, on which I would have hoped the Department of Trade and Industry had collaborated with the Inland Revenue and Treasury, as they both want to restrict the use of transfer pricing to launder profits into other jurisdictions either for avoiding tax or for money-laundering purposes. It is an important fact that FTSE 100 companies have 1,500 subsidiaries through which profits can be laundered. Indeed, 60 per cent. of world trade goes through multinationals. Bearing that in mind, something has to be done about transfer pricing, and amendment No. 801 actually does it.
	There is considerable concern about this problem in the United States, where several inquiries have been conducted. UNESCO has also had some inquiries. From tax inquiries and congressional hearings in the US, it has emerged that the more flagrant examples of transfer pricing include, for instance, importing plastic buckets from the Czech Republic at $972 each, fence posts from Canada at $1,800 each and a kilo of toilet paper from China at $4,121. That shows how trade is used to launder money out of one jurisdiction into another. Lower prices, going the other way, include prefabricated buildings to Trinidad at $1.20 per building and bulldozers to Venezuela at $387. In that way, tax obligations in one jurisdiction can be avoided and money can be laundered through to another jurisdiction, so it is important that we know what is going on.
	The Treasury and tax authorities are now grappling with the problem. They are already tackling royalty payments by IBM, and Vodafone is currently locked in a transfer pricing discussion. We should get companies to declare what transfer pricing policies they are using and to report at constant market prices so that we know what is being done. It is public information and not a great burden on companies. Indeed, Henderson Global Investors, one of the largest institutional investors, has openly called for transfer pricing disclosures so that investors can know where the money is coming from, what is happening to it, where the profits are being generated and where tax has been paid. As I say, it is an important piece of investor information.
	I do not have time to speak to all the amendmentsto the House's great regret, I am surebut I want to deal with another amendment in detail.

David Howarth: On a point of order, Mr. Deputy Speaker. The hon. Member for Great Grimsby (Mr. Mitchell) is making a very interesting speech, but I am afraid that he is speaking to amendment No. 753, which is in the next group of amendments.

Mr. Deputy Speaker: Perhaps the hon. Member will bear that in mind as the debate continues. Let us get on with it.

Austin Mitchell: The next group will have to be voted on at 3 pm as well, and the principle is exactly the samethe publication of information by companies so that markets and the authorities know what is going on. That applies to amendment No. 820, which deals with the publication of the highest and lowest annual earnings by employees, the number of UK-based workers and the gap between male and female earnings. All the years of pressure to equal up pay and to take action against low pay have not succeeded to the extent that is socially necessary.
	If we require companies to report on what they are doing, it may well prove a way of bringing pressure to bear on them in the face of a glaring scandal. There are massively high pay levels at the top in comparison with exploitation and low wages at the bottom. Between 1997 and 2004, the average FTSE 100 chief executive's total annual pay rose by 80 per cent. to 1.7 million. Pay at the bottom did not increase in anything like the same way, so the gaps are becoming ever more glaring. The only way to deal with the problem is to let people know what is going on and for companies to report on what they are doing. If companies want their enterprises to be run as a body, co-operating in order to advance the company and achieve greater shareholder value, they should be proud of their pay record and proud of what they are doing to provide incentives for their lowest-paid workers, particularly women.
	Unfortunately, I do not have time to deal with all the amendments in the group, but many of them deal with a growing trend, discernible in America, whereby companies want to report on their achievements. Massive public relations campaigns are taking place and millions of dollars are being spent in America on publishing that information, yet the Conservative Opposition in this country are niggling that any further obligations on companies will bring them crashing down around our ears, sending them into tax havens overseas and causing them to fire large numbers of workers. Those are ridiculous accusations to launch against what amounts to a simple principle of social justice and open governmentthat companies should be open and should be required to publish information, as Government Departments, public authorities and everybody else in our democracy has to. They are part of the fabric of society, and they must maintain their responsibilities to the fabric of society. That is my purpose in highlighting these amendments, and I hope that the Minister will make a difference when she replies to this fascinating debate.

Margaret Hodge: It has been an extremely good debate, and I particularly commend the speeches of my hon. Friend the Member for Hemsworth (Jon Trickett) and the hon. Member for Putney (Justine Greening) and those of my right hon. Friends the Members for Oldham, West and Royton (Mr. Meacher) and for Cardiff, South and Penarth (Alun Michael), who in their ministerial capacities contributed enormously to the agenda. I should also have mentioned my hon. Friend the Member for Elmet (Colin Burgon). Despite my interruptions, it was great to see the hon. Member for Putney contribute from the Front Bench, and I welcome her to her role.
	I want to deal quickly with the issues. Yesterday, we talked about directors' duties under clause 173. Today, we are considering clause 423 and, as I said yesterday, the two clauses go hand in hand and form an integral part of our approach in introducing a framework for corporate social responsibility while promoting business success. I do not want to repeat what I said yesterday, but some Members here today were not here yesterday. I know that many Members have received hundreds of representations on these issues and that there is great public interest in what we are debating.
	It is important to put it on record that the purpose of the Bill is to provide a regulatory and legal framework that will promote enterprise and growth and that will encourage investment and employment. As our leading British companies and businesses recognise, businesses will prosper best, will be sustainable for the longer term and will grow faster when they act in an enlightened way. Businesses do not operate in a vacuum; they operate within communities and as part of society. All responsible businesses recognise what they do and how they do it impacts on the community in which they operate and more widely in society. All responsible businesses take account of the economic, social, environmental and human rights implications and impacts of what they achieve. By improving the way in which companies report on their activities and by enhancing the transparency of that reporting, the clause will make it easier for shareholders to hold directors to account.

Susan Kramer: rose

Margaret Hodge: I am sorry but I will not give way, because time is very short.
	I will deal briefly with new clause 1, new clause 2 and our amendments. New clause 1 was tabled by my hon. Friend the Member for Hemsworth. All companies, except small companies, will have to prepare a business review. Most companies, such as the Virgins and the Asdas, will choose of their own volition to incorporate many of the issues that we are debating when they prepare that review. However, we have exempted large private companies from having to comply with the fifth element of clause 423 for a particular reasonbecause there is a difference between the position of a private company and a public company. A quoted company has dispersed shareholders and operates in a regulated market for its shares, and we believe that that requires a greater degree of statutory underpinning for transparency and scrutiny than for companies that are privately held. However, all companies, including Thames Water, will have to report with a business review.
	My hon. Friend the Member for Hemsworth raised the issue of materiality, and we think it wrong to remove what is described as the materiality requirement in the review, as his amendment seeks to do. The provisions were drafted carefully to avoid the review becoming a box-ticking exercise. The requirements are for the review to be
	a balanced and comprehensive analysis...consistent with the size and complexity of the business
	and for quoted companies to include specific information
	to the extent necessary for an understanding...of the company's business.
	That provides flexibility in the disclosures that need to be made and enables the directors to exercise their judgment as to whether something should be included. When the directors believe information to be material to an understanding of the company's business, we would expect them to include it in the business review.
	I am tight for time, so I wish to deal with issues relating to the Government amendments and then new clause 2. On the Government amendments, I say to the hon. Member for Putney that we have listened to all stakeholders, not just business stakeholders. It was in response to the representations that we had from all stakeholders that we brought forward the amendment to the business review. Of course I will meet, as I always do, the business representatives who may be concerned about this, but our slight amendment just reflects what was in the original company law review.
	I also wish to say something about what has appeared in the press today. It remains the directors' judgment to decide what is relevant in the supply chain for them to report on. Nothing is changed by the amendment. It does not require companies to list their suppliers and it is not about miles and miles of paperwork. As clause 423 says, a quoted company will in its business review have regard to the content of the amendment
	to the extent necessary for an understanding of the development, performance or position of the company's business.
	No more, no less. Some of the fears that the hon. Lady mentioned do not reflect what will happen in practice.
	I have a great deal of sympathy for the motivation of my hon. Friend the Member for Elmet in tabling new clause 2. Hon. Members want there to be consistent reporting across companiesI understand thatso that comparisons can be drawn and so that we can see the history of an individual business's reporting against consistent criteria. We have not gone down the road of giving standards a statutory underpinning, because we think that new clause 2 would encourage a box-ticking culture rather than encourage directors to think about the issues on which they are reporting. However, guidance is prepared by the Accounting Standards Board, and it has said that it will update and revise it. I am sure that companies will have regard to that guidance.
	The argument is therefore between voluntary guidance and standards that are recognised in statute. I will closely monitor implementation of the clause in practice to make sure that it leads companies to provide meaningful and useful narrative reporting on issues relevant to the particular company. Specifically, I will ask my officials to conduct an assessment of whether our provisions are working in the way that we hope two years after the implementation of the business review provisions of the Bill. We will consult business, non-governmental organisations and other stakeholders as part of that process, and it will be open to us to return to the issue if the law does not work in the way we intend. We have the power in the Bill to add to the contents of the business review.
	Finally, it is important to say to those who have been pressing for more movement on the review that I have seen the corporate social responsibility agenda develop over time. Provisions that are controversial today but are adopted by some, become widespread tomorrow. It is an evolving agenda as there is greater acceptance of the wider responsibilities of a company. I believe that companies will change and that their role in the community will change. It is on that basis that I ask hon. Members not to press their new clauses and amendments.

Jon Trickett: In the light of the Minister's comments, and particularly in the light of the supply chain amendment, I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.
	 It being Three o'clock, Mr. Deputy Speaker,  put forthwith the Questions necessary for the disposal of the business to be concluded at that hour, pursuant to Order [17 October].

New Clause 75
	  
	Requirement for audit of business review

'The auditors must state in their report
	(a) whether in their opinion the information given in the business review for the financial year for which the annual accounts are prepared is consistent with those accounts; and
	(b) whether any matters have come to their attention, in the performance of their functions as auditors of the company, which in their opinion are inconsistent with the information given in the business review.'. [David Howarth.]
	 Brought up, and read the First time.
	 Motion made, and Question put, That the clause be read a Second time:
	 The House divided: Ayes 60, Noes 439.

Question accordingly negatived.

Crispin Blunt: On a point of order, Madam Deputy Speaker. The Opposition wish to oppose Government amendment No. 821 but, because of the programme motion, it would appear that we do not have any choice except to oppose every Government amendment listed, until the falling of the knife. Is there any way that we can vote against amendment No. 821 without having to vote against all the Government amendments?

Madam Deputy Speaker: I must inform the hon. Gentleman that the Opposition will have to vote against all the Government amendments; under the programme motion, I am bound to put all the remaining amendments in this group.

Question put, That amendments Nos. 821, 822, 712, 530 to 533, 311, 303, 340, 341, 312 to 315, 235 to 239, 824, 224, 713, 534 to 536, 240, 537, 825, 538, 316 and 539 to 543 be made:
	 The House divided: Ayes 346, Noes 165.

Question accordingly agreed to.

New Clause 16
	  
	Names and addresses of members of companies: company application

'(1) Subject to the provisions of this section, a company may make an application under this section to the Secretary of State where the condition in subsection (2) is satisfied.
	(2) The condition referred to in subsection (1) above is that the company considers that the availability for inspection by members of the public of particulars of the names and usual residential or business addresses of the members of the company creates, or (if an order is not made under this section) is likely to create, a serious risk that a member of the company or a person who lives with or is an employee of a member of the company will be subjected to violence or intimidation (a serious risk).
	(3) Where, on an application made by a company under this section, the Secretary of State is satisfied that the availability for inspection by members of the public of the particulars of that company's members' usual residential addresses creates or (if an order is not made under this section) is likely to create a serious risk that a member, or a person who lives with him, or an employee of his will be subjected to violence, intimidation or criminal activity, he shall make an order under this section (a company member's confidentiality order) in relation to the company.
	(4) Where the Secretary of State is not satisfied under subsection (3) he shall dismiss the application.
	(5) At any time when a company member's confidentiality order is in force in relation to a company, the name and address of any individual in the register of members of the company that is the subject of the confidentiality order, shall not be disclosed to any person who may request either company or Companies House disclosure of such names and addresses save in prescribed circumstances.
	(6) The Secretary of State shall give the applicant notice of his decision under subsection (3) or (4); and a notice under this subsection shall be given within such period and shall contain such information as may be prescribed.
	(7) At any time when a company member's confidentiality order is in force in relation to a company, the company must pass on to all of its members any lawful message or documentation that a member of the company or a member of the public wishes to send to the company's members.
	(8) The company may charge a reasonable fee for sending a message or documentation under subsection (7).
	(9) Where the company has become bound to act under subsection (7) and has failed to so act, an offence is committed by
	(a) the company, and
	(b) every officer of the company who is in default.
	(10) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
	(11) In the case of any such refusal or default as set out in subsection (9) the court may by order compel an immediate inspection of the register or, as the case may be, direct that a copy of the register be sent to the person to whom the undertaking was made.
	(12) The Secretary of State may at any time revoke a company member's confidentiality order if he is satisfied that such conditions as may be prescribed are satisfied.'. [Mr. Djanogly.]
	 Brought up, and read the First time.

Jonathan Djanogly: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	New clause 17 Names and addresses of members of companies: individual application
	'(1) Subject to the provisions of this section, an individual may make an application under this section to the Secretary of State where the condition in subsection (2) is satisfied.
	(2) The condition referred to in subsection (1) above is that the individual
	(a) is or proposes to become a member of a relevant company; and
	(b) considers that the availability for inspection by members of the public of particulars of his name and usual residential or business address creates, or (if an order is not made under this section) is likely to create, a serious risk that he or a person who lives with him or an employee of his will be subjected to violence, intimidation or criminal activity (a serious risk).
	(3) Where, on an application made by an individual under this section, the Secretary of State is satisfied that the availability for inspection by members of the public of the particulars of the individual's usual residential address creates or (if an order is not made under this section) is likely to create a serious risk that the individual, or a person who lives with him, or an employee of his will be subjected to violence, intimidation or criminal activity, he shall make an order under this section (an individual member's confidentiality order) in relation to him.
	(4) Where the Secretary of State is not satisfied under subsection (3) he shall dismiss the application.
	(5) At any time when an individual member's confidentiality order is in force in relation to an individual the name and address of the individual in the register of members of the company which is the subject of the confidentiality order shall not be disclosed to any person who may request either company or Companies House disclosure of such name and address save in prescribed circumstances.
	(6) The Secretary of State shall give the applicant notice of his decision under subsection (3) or (4); and a notice under this subsection shall be given within such period and shall contain such information as may be prescribed.
	(7) At any time when an individual member's confidentiality order is in force in relation to a company, the company must pass on to all of its members any lawful message or documentation that a member of the company or a member of the public wishes to send to the company's members.
	(8) The company may charge a reasonable fee for sending a message or documentation under subsection (7).
	(9) Where the company has become bound to act under subsection (7) and has failed to so act, an offence is committed by
	(a) the company, and
	(b) every officer of the company who is in default.
	(10) A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.
	(11) In the case of any such refusal or default as set out in subsection (9) the court may by order compel an immediate inspection of the register or, as the case may be, direct that a copy of the register be sent to the person to whom the undertaking was made.
	(12) The Secretary of State may at any time revoke an individual member's confidentiality order if he is satisfied that such conditions as may be prescribed are satisfied.'.
	Amendment No. 758, in clause 113, page 51, line 22 , at end insert
	'to whom the beneficial rights and obligations of membership belong'.
	Amendment No. 383, in clause 116, page 53, line 35 , at end insert
	'(5) Notwithstanding the foregoing provisions of this section, a shareholder in a quoted or publicly traded company who is an individual shall have the right to require that his home address is not set out in the register of members available for inspection or in the copy of the register supplied by the company pursuant to a request, nor in any record of the register of members supplied to the Registrar of Companies for the public file maintained by the Registrar.'.
	Amendment No. 384, in clause 117, page 53, line 38, leave out 'five' and insert 'fifteen'.
	Government amendment No. 222
	Amendment No. 683, in clause 9, page 4, line 28, at end insert
	'(d) a statement setting out and verifying the identity of the initial shareholders.'.

Jonathan Djanogly: I congratulate my hon. Friend the Member for Putney (Justine Greening) on her succinct and expert introduction at the Dispatch Box. She gave an excellent presentation and her experience showed through in the quality of her remarks.
	We move on to the rights of shareholders and non-members to inspect and require copies of the register of members of a company. Although we believe that the Government have made good progress on protecting shareholders, we would like the Bill to be bolstered further. The initial Bill that was presented in the House of Lords contained little on the matter. However, after several thousand shareholders in GlaxoSmithKline, the pharmaceutical group, started to receive threatening letters from animal rights terrorists, Lord Sainsbury, on direct orders from above and urged on by a chorus of vocal peers, suddenly promised on Report to reconsider the Government's position before Third Reading in the Lords, when amendments were indeed tabled and slipped into the Bill.
	We have been demanding increased protection for shareholders for several years. The Government rejected amendments that we tabled to the Serious Organised Crime and Police Bill that would have achieved that, so we are pleased that the matter is being addressed. My hon. Friends and the public wish to ensure that shareholders are protected from violence and intimidation.

Paul Farrelly: We have been round the houses on this in our six or seven weeks in Committee. I understand that the hon. Gentleman is interested in the matter as a constituency issue, principally because of Huntingdon Life Sciences. Does he agree that he is perhaps not the right person to front this debatemaybe the hon. Member for Putney (Justine Greening) should be doing sobecause he is in danger of confusing a constituency problem about which he is rightly worried with measures that would have a broad-ranging effect on companies legislation affecting business as a whole, to which I hope to refer later?

Jonathan Djanogly: I am pleased that the hon. Gentleman has given me the opportunity to put on record the fact that, although Huntingdon Life Sciences is in my constituency and I have been following its ongoing problems with animal rights terrorists, that introduction to the subject has probably given me an expertise that other hon. Members might not have, not least because I have seen at first hand what can happen and have spoken to the police and the companies affectednot only HLS, but dozens of its suppliers. I would say that my experience helps my cause, rather than gives me a problem. I appreciate that the hon. Gentleman was an investigative journalist in his previous career and some of his remarks might come from that perspective. However, I would not say that it is any worse to make them because of that. Perhaps that balances out the situation.
	In any event, this is about more than protecting companies that practice animal testing, although that is the matter on which I have direct experience, as I explained to the hon. Gentleman. This is about the kind of environment that we offer for people who invest in business in this country. Just as the protection of the person must be a priority for the Government, the protection of companies and their shareholders must also be a priority. Without that protection, business will simply pick up and go.
	I point out, with some irony, that several speakers in the Lords debate and several journalists have made out that the GSK letter incident was a new and dangerous development. That was not the case. Attacks on shareholders have become an established theme of anti-corporate activism. Although direct action, sometimes slipping into terrorist activity, is emanating from animal rights activists today, the same methods could be used tomorrow by other groups. If drug manufacturers, animal testing companies and furriers are affected now, meat importers, road builders, handbag manufacturers, furniture makers or mining companies could be affected tomorrow.
	I emphasise the fact that countering criminal activity using shareholders' registers goes much further than dealing with extremists. Another significant example of such activity is the growth of foreign-based so-called boiler rooms. They harvest the personal details of individuals from members' registers and approach those shareholders to try to persuade them to buy investments that are often worthless, regularly by implying that there is a connection with the company concerned.
	A court case recently revealed that fraudsters had been using registers to steal shares from overseas investors. The  Financial Times reported in May that the company secretary of Balfour Beatty wrote to the company's 20,000 shareholders after receiving a significant number of complaints. I received a separate letter from Balfour Beatty that outlined the company's concerns about the situation. Diageo wrote to 110,000 shareholders after similar calls were made to its members.

Douglas Hogg: I have a great deal of sympathy with the point that my hon. Friend is making, but I have a reservation about new clause 16. As far as I can tell, if the Secretary of State decided to grant the request of the applicant, there would be no process whereby his decision could be reviewed, say by judicial review. Does my hon. Friend think that, if new clause 16 were accepted, it should have an appeal mechanism against the decision of the Secretary of State?

Jonathan Djanogly: My right hon. and learned Friend makes his important point well, although it is related not to new clause 16, but to the clause per se.

Paul Farrelly: I was going to raise exactly the same point that the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) made so well. The hon. Member for Huntingdon (Mr. Djanogly) is speaking rather more widely than to just new clauses 16 and 17 because he is addressing amendment No. 383. That amendment would make the new clauses redundant because it would confer on any shareholder the right to remove his name from the share register that is made publicly available.

Jonathan Djanogly: The hon. Gentleman pre-empts me because I have some way to go before I get on to amendment No. 383. The amendment was proposed by an outside body as an alternative suggestion. I thought that it was worth tabling the amendment so that we could hear the Minister's response to it, given that it is a sensible suggestion. However, it does not tally with our approach in the new clauses, which I will support.
	I thank the Institute of Chartered Secretaries and Administrators for the action that it is taking on boiler rooms. The institute recently announced that it had produced a warning notice to be used by companies to raise awareness of boiler rooms. The notice can be distributed to shareholders with other mailings or via websites. We feel that that is a positive move against operators of boiler rooms.
	We need to appreciate that many, if not most, of the companies affected by the problem are far from large companies such as GSK. They are usually small family businesses for which a civil injunction costing thousands of pounds against illegality or terror would often be unaffordable. More to the point, such companies are saying, Is it not for the Government to defend us against terrorist activity, rather than our having to pay for an injunction?
	Where do shareholders fit into all this? I have tried to explain that the debate is multifaceted and highly interconnected. Activists will often look for weak pointsthe points at which with the minimum number of people they can inflict the maximum damage, be that to property, people or the company's economic prospects. Many companies will fold under such a concerted and multi-directional attack, but some companies that believe in what they are doing and refuse to be scared by intimidation will trade oncompanies such as HLS and Montpelier, the company that is building the Oxford laboratories. In both those cases, the crisis was sparked by terrorists attacking the companies' shareholders via the register of members. At that point, HLS, unable to survive as a company registered in this country because of the hate mail and death threats being sent to its shareholders, repatriated itself to Maryland, USA, and relisted on the US NASDAQ exchange. Why Maryland? Because in that state only holders of 5 per cent. or more of a company's shares have to be disclosed, and then only to other shareholders. We are not advocating that approach for the United Kingdom, but the case does show what will happen if we do not get on top of the problem: other companies will leave the country.
	To amplify the importance of the issue, let us examine the case of Montpelier in Oxford. The company bravely resisted the attacks of the terrorists, but finally stopped work when its shareholders started to be threatened and attacked. As a relatively small listed company, its share price was directly affected by that activity, so a direct link could be made between access to a register of members and impending disaster for the company. Roughly the same tactics were used in the terrorist attack on GSK shareholders as in the HLS and Montpelier cases. The letters to GSK shareholders stated:
	The only way to hold GlaxoSmithKline to it's PROMISE
	not to use HLS
	is to target it's financial vulnerability. We are therefore giving you this opportunity to sell your shares in GlaxoSmithKline. If you have any doubts over the effectiveness of this action then keep a close eye on the GSK share price and watch it plummet.
	If we do not get on top of this problem, we will see many more Huntingdon Life Sciencesmany more companies repatriating. We can have whatever tax regime we like; if a company's shareholders are going to be attacked physically, the company will be forced to consider moving. To put the pharmaceutical sector alone into perspective, it contributes more than 6.5 billion a year to Britain's GDP and 12 billion in exports, and employs 80,000 people directly and 250,000 indirectly. The issue is a serious one for this country.
	I have attempted to explain the need to protect shareholders' details, so how should we now proceed? My first point is that, as things stand, a coach and horses can be driven through the Bill's provisions, because, in addition to the current register of members being accessible, copies of the register of members as at the return date need to be filed annually with the annual return, which is a publicly accessible document. In Committee in the Lords, Ministers said that they would consider introducing regulations to change that requirement, but why not simply add the relevant provisions to the Bill? We tabled an amendment for that purpose, which we hope to move whenor ifwe reach part 25, which deals with annual returns, in the latter part of tomorrow.
	Since that time, there has been Government confusion on the issue. In Committee, the Minister for Industry and the Regions suggested that our proposal on annual returns was too restrictive, but the Secretary of State has said that he intends to use regulations to ensure that a company need supply only details of shareholdings of 5 per cent. or more in its annual return. I shall be grateful if the Solicitor-General makes clear the Government's intentions.
	The formula chosen by the Government is for the company to initiate an application to the court if it objects to a request to see the register. One problem that we have identified is that, although it may be possible for a large company to instruct lawyersprobably solicitors and barristersto take the matter to court within five days to comply with the Bill's provisions, although it would probably be pushed to do so, it would be unrealistic to expect a smaller company to keep to such a tight and inconvenient timetable. That is why we tabled amendment No. 384, which would increase from five days to 15 the period in which a request that a person be deemed unsuitable to receive the register must be made.
	In Committee, the Minister's response was that a company of any size should be aware of a suspect application straight away, and that if company directors were given too long, there would be a risk of abuse on the part of the company. However, in its brief of 2 October, the Confederation of British Industry stated that it did not regard an extension of the period as an invitation to abuse the application process, but as an opportunity for companies to consider whether requests were for a proper purpose or not, to take advice, and to respond appropriately. We continue to support the CBI's view, and that is another reason why we tabled amendment No. 384.
	The Government intend to provide that people have to identify the purpose for which the information is to be used. We tabled a probing amendment in Committee stating that that information should be precise. For example, what if the reason given is that the applicant wants to inform shareholders of an important matter for themselves, the company, humanity, or the environment without stating that he or she intends to ask shareholders to sell their shares as a protest? As hon. Members can see, this could be a complicated matter. In Committee, the Minister did not accept that our proposed amendment would add much to the definition of proper purpose, but we think that it would be helpful if the Government at least issued some guidance.
	A further approach, which we see as being complementary to the Government's approach, is to provide companies and individuals with the right to apply to the court to close the register if the availability of the register creates, or is likely to create, a serious risk that a member of the company or connected parties will be subject to violence or intimidation. In other words, not all companies would be thrown into the same basket. Some companies or individuals may be at such risk or under such pressure that they should be treated on a stand-alone basis. The provisions could be tacked on to the existing provisions as a further level of protection, which might be more realistic, more accessible and certainly cheaper for smaller companies that need protection.
	Furthermore, the existing clause works only for a company to seek protection in respect of all its members. It does not provide for an individual member to seek to protect his or her details. We therefore tabled new clause 17 to allow for that. The theme of individual rights to allow people to protect themselves, rather than relying on the company to seek protection for them, has also been taken up by the CBI. Our final amendment, No. 383, as I mentioned earlier, was proposed by the CBI for that purpose.
	The amendment is complementary to the issue of directors' home addresses and allows for the home address of a registered shareholder in a listed company or a company traded on a regulated market not to be disclosed if the shareholder does not wish it. In short, the shareholder has a legal right to require that his home address be omitted from the register of members which the company may be asked to supply to a third party, and from the public register of shareholders maintained at Companies House. In the past, the Government have told us that that is unnecessary because shareholders can use nominees. In practice, many smaller shareholders will not do that, so we see the CBI's point.
	In Committee the Liberal Democrats provided a further option, which we thought was worthy of consideration. Their amendment provided for a company, by members' resolution, to stop inspections of the register of members, on the basis that it agrees to pass on lawful communications. Although we thought that was a step too far in terms of restricting access to the register, we can see the importance of the second strand of the Liberal Democrat amendment. If the register is closed, the company must take on the responsibility of passing on communications. We therefore tabled new clause 16, reflecting our joint proposal.
	The Minister dismissed our comments on this point in Committee as very wide ranging. She was concerned that we were restricting long-held principles on public access to the register of members. That is not the case. All we are doing is allowing a court in extremis to protect the small minority of companies whose details are highly sensitive, for whatever reason. That would never be an everyday occurrence and a court decision to close the register would be taken only on a company by company basis and, I imagine, very carefully.
	Amendment No. 683 tabled by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) deals with initial shareholders. I believe that is covered by the Bill as drafted, although the Minister may wish to elaborate on the point. With reference to amendment No. 358, the register is a register of legal owners. We have supported the concept of giving rights, votes and information in particular to beneficial owners of shares. We were delighted to see the Government move on the matter. However, we see no reason to change the underlying nature of ownership split between legal and beneficial owners. I look forward to hearing the Minister's views.

Paul Farrelly: I shall speak briefly against new clauses 16 and 17 and amendment No. 383. We spent six or seven weeks in Committee discussing the matter at great length, so I shall not repeat all the arguments against. Essentially, they have to do with regulation, law enforcement and the shareholder protection regime in the UK. However, I shall have to repeat some of the arguments, as the Conservatives clearly have not listened. I shall pay a compliment to the hon. Member for Cambridge (David Howarth). The Liberal Democrats tabled similar amendments in Committee and it is to their credit that they have not advanced them again on the Floor of the House.
	As I said in my intervention, I understand the constituency interest of the hon. Member for Huntingdon (Mr. Djanogly), arising from the position of Huntingdon Life Sciences, but with respect to animal rights terrorists, by advancing those new clauses, he is using a sledgehammer to crack a few nuts.
	We had a similar situation at a guinea pig farm in Staffordshire, where the animal rights terrorists went as far as exhuming a body and kidnapping the bones, and they also occur elsewhere in the country. But the police have not been beating a path to my door saying that a clause such as this is essential to help them to prosecute the perpetrators. More fundamentally and importantly, investors, the Association of British Insurers, the British pension funds, City banks and the stock exchange are also not clamouring for clauses such as this in the Companies Act because they are aware of the wider consequences for shareholder protection and company regulation.
	The reason for that is that new clauses 16 and 17 are drawn extremely widely. Amendment No. 383 institutes an absolute right to shareholder secrecy, and I note the comments of the hon. Member for Huntingdon on my intervention that he will not put that to a vote later. Like him, I do not take that amendment very seriously, but even the new clauses are drawn extremely widely. The test is that the company has to show that its members or their families run the risk of being subject to violence and intimidation.
	In Committee, I gave an example from my days as an investigative journalist when I pursued a bank director in Russia whom I considered to be a dodgy stockbroker. He was pursuing various deals in Moscow, which in those days during liberalisation was the equivalent of the wild east. Because he had a grudge against a number of other people whom he came up against in negotiations, he let it be known that one particular director of a Dutch bank was the blocking point to a big deal with Gazprom. The Dutch bank director's house in Moscow was subsequently set on fire when his family was in it.
	In such circumstances, a major bank might come to the Secretary of State and say that it operates in Russia or in a lawless country and that there is a severe danger that if the identities and addresses of not only their employees but their shareholders are disclosed, they may be subject to the risk of violence and intimidation. The companies that are most difficult to regulate and enforce laws against, and funnily enough that are most regularly involved in fraud, are the very same companies that operate offshore. They are usually small companies, operating in dangerous environments. To institute a right on their behalf of secrecy of membership would make regulation and shareholder protection much more difficult.

Douglas Hogg: The hon. Gentleman makes a perfectly fair point, but if there was a reviewing mechanism whereby the reviewing body had to take account of public interest and proportionality, many of the objections that he has made against new clauses 16 and 17 would fall away.

Paul Farrelly: I accept the right hon. and learned Gentleman's point. My point is that the clause is drawn widely, and as he himself has pointed out there is no right of appeal against this for journalists such as myself or other agencies if the Secretary of State were to err on the side of caution and confer such a right.

Jonathan Djanogly: The hon. Gentleman makes a point in relation to dodgy directors operating through offshore companies, which of course will not be subject to the Companies Act in any event.

Paul Farrelly: I am illustrating the general point that companies operating in dangerous environments may make use of this sort of clause to try to confer, for illegitimate reasons, secrecy on their shareholder base. To summarise the arguments that I made in Committee, effectively, in many instances, that would be tantamount to a fraudster's charter, which would block the legitimate efforts of myself and former colleaguesI have spent far too many hours than I care to remember meticulously tracking down connections between shareholders on the basis of their addresses.

Elfyn Llwyd: The hon. Gentleman pursues an interesting line of thought, but does he appreciate that if the Secretary of State carefully looks at the whole matter at the beginning, he is unlikely to sanction a fraudulent operation such as the hon. Gentleman describes?

Paul Farrelly: I will come to that point when I conclude my remarks, but the hon. Gentleman is perhaps conferring an omniscience on the Secretary of State that they may not possess at the time.
	The bar to legitimate investigative journalism also applies to the activities of law enforcement agencies such as the Serious Fraud Office and the stock exchange. In Committee, I advised the hon. Member for Huntingdon to ask the Cambridgeshire constabulary fraud squad whether that approach would hamper its efforts.
	More widely, new clause 16 will damage shareholder protection. If the rights of secrecy are granted to a company, which may have stocks on which people have taken a punt, the shareholders may not know who controls the company. A concert party could be legitimised through such shareholder secrecy.

David Howarth: The hon. Gentleman made a number of important comments in Committee, which have influenced thinking on both sides of the House. However, his point that the police and investigative journalists would be excluded has been taken into account in the drafting of new clause 16, which is very different from the provision that we discussed in Committee. New clause 16(5) would allow the Secretary of State to prescribe circumstances in which the information would be given to, for example, the authorities. The hon. Gentleman has made a serious point, but new clause 16 takes it into account.

Paul Farrelly: I take the hon. Gentleman's point, but the Secretary of State may not be in a position to foresee all sorts of circumstances, just as they may not know all the facts about a particular company behind a particular application. If the facts were known, there would be no impediment, because the company would already have been investigated.
	On shareholder protection, one company may wish to take over another company, but if it is unable to access the share register, the conduit for takeovers or for any communications with shareholders would be the company itself. If there are question marks about a company, one would not want it to be the master of the information that goes to its shareholders, and similar arguments also apply to credit protection.
	New clause 16 will put the Secretary of State in an impossible position. If an application is made, the likelihood is that the Secretary of State will err on the side of cautionin other words, they will be damned if they do and damned if they do not. If a company were to tell them that there was serious risk of violence and they said, I do not believe it, if the violence were to occur, then the Secretary of State would be damned. Equally, if they were to grant an order and the company turned out to be fraudulent, they would be damned again.

Jonathan Djanogly: The application will be made to the court, so the issue would predominantly be dealt with by court process.

Paul Farrelly: I have listened carefully to the hon. Gentleman, who listened carefully to the debate in Committee because of his particular constituency interest. I suspect that taking a sledgehammer to crack a few nuts would drive a coach and horses through effective shareholder protection and company regulation in this country, which is why I oppose new clauses 16 and 17 and amendment No. 383.

David Howarth: The hon. Member for Huntingdon (Mr. Djanogly) has described the circumstances that have given rise to new clauses 16 and 17. I agree with other hon. Members who have spoken that amendment No. 383 is far too draconian, which is why I cannot see any hon. Member supporting it. The issue therefore concerns new clause 16, which is a serious proposition that responds to the debate in Committee by combining the various proposals.
	I freely admit to the House that the proposals that we put to the Committee were not perfect, by any means, and we listened to that debate carefully. The question is whether this composited new clause deals with the objections that were raised in Committee and again today. On the whole, I think that it does.
	The key question is how far to go in a direction that the Government have already agreed on. Clauses 117 and 118 go a long way towards protecting shareholders in the circumstances of violence and intimidation that have been described. The hon. Member for Newcastle-under-Lyme (Paul Farrelly), who has made several important contributions to the debate, exaggerates rather when he says that this extra bit of protection is a fundamental threat, but the existing clauses are not. In fact, the distance between what the Government propose and what the new clause proposes is very small.

Paul Farrelly: One of the main points that I was trying to make is that the clauses put the matter in the hands of the Secretary of State, who will be put in an impossible position in being forced to err on the side of caution. That opens the door more widely to the aforementioned coach and horses.

David Howarth: I was going to come that later, but we may as well deal with it now. The hon. Gentleman refuted his own point as he made it. He said that the Secretary of State will face two possible errors, both of which would be equally embarrassing. His conclusion that they would always err on the side of caution was not shown by his remarks, because that would be true only if the error in one direction was more embarrassing than that in the other direction.
	The issue before us is the extent to which the Government's proposal is enough to satisfy the legitimate concernsnot only constituency concernsthat have been raised by Opposition Members. The Government point to clause 117(4) as providing adequate protection, but what is crucial is whether it is as much as is necessary There is no doubt that it offers a lot of protection, because the register is effectively closed in the circumstances where it applies.

Douglas Hogg: The problem with clause 117 is that the court must know what are the motives of the person seeking the inspection, yet they would often have a covert motive that would not be known to the court.

David Howarth: I thank the right hon. and learned Gentleman for his comment. That is a significant problem with the way in which clause 117 is draftednamely, in terms of purposes. As he says, it is often difficult for courts to have access to the purposes of individuals. Subsection (4) makes use of that concept when it refers to
	requests made for a similar purpose.
	It is difficult to get access to people's minds to find out whether their purpose is similar.
	The other problem is that clause 117(4) says that the court
	may direct that the company is not to comply with any such request.
	That means that the company could be subject to continued harassment in the courts whereby people could make a new request saying that it is not for similar purposes and is therefore not such a request. Even if the court had made an order under clause 117(4), the company, especially in the case of a small business or a business without much in the way of resources, could come under great pressure from organised campaigners working on behalf of people whose purposes were probably nefarious. There is therefore a problem with the protection that clause 117(4) provides. That leads to the question of what other protection might be offered in such circumstances.

Elfyn Llwyd: I appreciate that the hon. Gentleman is an expert in law and I am sure that that applies to company law, too. However, he describes circumstances in which someone was intent on taking a matter to court time after time to try to break through. Would not the court take the view that that constituted vexatious litigation, and would not such persons be ruled out?

David Howarth: As I understand the system, the Attorney-General would have to declare people to be vexatious litigants. That would lead to the problem that the hon. Member for Newcastle-under-Lyme outlined of putting Ministers in a difficult position.

Jonathan Djanogly: Many shareholders could buy one share each or many people could ask for access to the register, all with slightly different reasons for doing that, but with the same underlying vexatious purposes. That would mean a series of cases that would keep the company in court.

David Howarth: That is true. One cannot declare whole classes of people to be vexatious, only specific individuals.
	The hon. Member for Newcastle-under-Lyme claimed that the new clause was too widely drawn. That is a serious accusation against it. However, I believe that it is narrowly drawn. It would provide that the Secretary of State had to find a specific set of facts to do with violence and intimidation before being allowed to close the register. If the Secretary of State failed to do that properly, there would be a possibility of judicial review. That is not the full system of independent review that the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) mentioned; nevertheless it is an important safeguard.
	Let me outline what makes the new clause much narrower than the proposal that was made in Committee and therefore acceptable. First, it would provide for the Secretary of State to prescribe circumstances in which, despite the closure of the register, information could be given out. That is an important difference between the proposal that was made in Committee and the new clause. As I said earlier, it deals with the problem of investigative authorities, perhaps even investigative journalists, being locked out of proper investigations.
	Secondly, the new clause includes an important element of our original proposal. The closure of the register should not prevent people from getting legitimate, lawful information to shareholders. The purpose is to prevent the violent intimidation of shareholders, not stop information getting to them. We proposed that a company that wished to invoke the new procedure should undertake, at a reasonable fee, to direct to its shareholders any information sent to it for them. The new clause maintains the right balance. Often, there are legitimate campaigns, even in industrial relations, and it is important that people get information to shareholders, perhaps over directors' heads. An important point about openness and transparency was made in Committee. The new clause preserves at least the essence of the proposal that was made in Committee.

Paul Farrelly: Will the hon. Gentleman direct me to where the new clause would safeguard openness and transparency in circumstances in which the company constituted the block and had thus taken advantage of the measure to keep members secret? Secondly, will he direct me to provisions in new clauses 16 and 17 for a right of appeal against the Secretary of State's decision?

David Howarth: On the hon. Gentleman's second point, there is no right of appeal but there is always a right of judicial review. To answer his first point, I would draw his attention to subsections (7), (8) and (9), which provide for a system to be set up by which a company has to pass on information subject to the charging of a reasonable fee, and which determine that failure to do so is a crime.
	It is ironic that some of us have been worried about the extent to which the Bill uses criminal penalties. It is perhaps a legitimate criticism of the Bill that it seems to go first to the criminal law, rather than using it as a last resort. Having listened to the views of the hon. Member for Newcastle-under-Lyme and others, however, I believe that it would be justified, if there were a serious risk that the provision would not be complied with, to back that right with a criminal penalty. The hon. Gentleman is right to think that there might be a connection between closing a register and not wanting information to be passed on.
	The proposal in new clause 16 is worth while, but it will not be used very often. Indeed, it will be used only in the most extreme circumstances. The main safeguard against its being used too widely is the Secretary of State. The hon. Gentleman says that it puts too much pressure on the Secretary of State, but I disagree. I think that this is just the kind of decision that Secretaries of State are employed to make, and I am sure that if they did not do it very well, their decisions would be subject to judicial review and perhaps also to the scrutiny of the House.

Mike O'Brien: I am trying to follow the hon. Gentleman's argument with care, but I am still not sure why he takes the view that the decision should be made not by the courtsas set out in clause 117but by the Secretary of State, with the safeguard of having the courts in the background. What is the point of this? I cannot follow the nub of his argument as to why the Secretary of State should make this decision, rather than the court.

David Howarth: That is an interesting point. The question that I would ask in return is: if new clause 16 proposed that the court should make the decision, would the Solicitor-General accept the system as one that he would wish to adopt? Is it that important?

Douglas Hogg: Perhaps the difference is that, under clause 117, the test is that of proper purpose, whereas under new clause 16, the question is one of risk. The two do not necessarily overlap.

David Howarth: That is absolutely correct. They are different concepts in terms of what has to be found, although either the Secretary of State or a judge could find in either instance. It is a close judgment between whether the Secretary of State or a court should do this. I have a preference for the Secretary of State, because the kind of circumstances that are likely to arise are so varied that the Secretary of State would be in a better position to judge all the different circumstances. He would also be in a slightly better position to gather all the evidence. If, however, one were to take the view that a court would be in a better position to gather the evidence and to take advice, one could establish the same system using a court. The question would then be: would the Government and the hon. Member for Newcastle-under-Lyme accept the new clause on those terms?

Paul Farrelly: The question does not really apply, because the new clause does not say that. These are the new clauses that we shall be asked to vote on later. I find it odd that the proponents of smaller government on the Conservative Benches, and the Liberal Democrats, who are proponents of more devolved government, should believe that this is the kind of decision that should be taken by the Secretary of State, day in, day out, rather than by a court, where the case could be put in far more detail.

David Howarth: These decisions would not be taken day in, day out. One of the important aspects of the proposal is that it would be used only rarely and sparingly. There are also policy matters behind the proposal, as has been revealed in the debate. As I have said, it is a close judgment as to whether a court or the Secretary of State should make these decisions, but on the whole, I believe that the Secretary of State is in a better position to make them, subject to judicial review.
	The proposal is far more narrowly drawn than the one that we discussed in Committee, and it meets a specific need. The provision in the Bill is good, but it is not quite enough. I urge the House to support the new clause.

Austin Mitchell: We are making heavy weather of a straightforward issue, although it was fascinating and quite a spectacle to see the Lib Dem spokesman, the hon. Member for Cambridge (David Howarth), struggling to maintain a foot in both camps, in his usual fashion and in his lawyerly way. However, the issue is clear cut and we should not accept new clauses 16 and 17 because they conflict with something quite basic, which is access to information, openness and full accountability.
	I, of course, have every sympathy with the shareholders of Huntingdon Life Sciences who were threatened, but to introduce such a complicated arrangement would mean invoking a sledgehammer to crack a few nuts, because those people were being persecuted by lunaticsthere is no other word for them. There is no way to protect everybody who might be threatened by such lunacy and no reason in relation to such a threat to invoke secrecy of the kind that would be invoked by new clauses 16 and 17. An important principle of openness would be breached just to avert a few much exaggeratedalthough I am sure painful for the shareholdersincidents. We should oppose these proposals, and in doing so I commend my amendments Nos. 758 and 683, which run in the direction of openness and against the spirit of the new clauses.

Elfyn Llwyd: The hon. Gentleman has expressed sincere concern about those affected in relation to Huntingdon, and there are other examples as well, but he should not simply describe the people who are perpetrating such acts as lunatics. They are plausible and intelligent, they make up a network and they are an increasing danger. The next people to be eyed up will be those such as me, who enjoy fishing at the weekend. This is a growth area. I know that he is taking the point seriously, as I would expect of him, but there was a real risk in relation to Huntingdon, and the Cambridge example as well. I foresee many others in the coming months and years.

Austin Mitchell: The principle the hon. Gentleman's invokes is that we should not publish any information about anything or anybody. In relation to his fishing activities, I picture him in his waders in the rivers of north Wales, which is a touching spectaclebut that that must be kept from the public eye, and that his name and address should not be published because he goes fishing, would be to go to extreme and silly lengths to avert something that is haphazard and low in incidence. The people we are discussing should be dealt with by the law for threatening behaviour, rather than by us closing down all access to information that they might use.
	The same principles that are being used to invoke this closure of information could be used to close the electoral roll, which might be used by people to enable them to send out bumf, go out knocking on doors, check people's credit or even check their existence. Because the electoral roll could be used in that fashion, should we not publish it? We cannot negate a fundamental principle of shareholder democracy to avert the action of a few people, which is wrong and which can be prosecuted through other means.
	The fundamental principle is that the list of shareholders should be published. That is what gives this corporate body that we have introduced an identity. For instance, my amendment No. 758 would stop the use of nominee names. Shareholders in Huntingdon Life Sciences could have used nominee names if they did not want their names to be known, but I would stop that practice entirely, because if people use nominee names, what is the use of a register?
	The principle of a joint stock company is that there has to be a register, so we know who is investing, what the company is about and who supports it. If we remove that principle, we attack the fundamentals of the joint stock company and the principles on which such companies were granted their corporate identity in the 19th century. Anonymity will always be abused.
	Under new clause 16, a company could designate itself as conducting undesirable activities. It could say, We have something to hide. Let's keep our registers secret so that no one knows who is investing in us. That principle would apply not only to Huntingdon Life Sciences, but to the arms trade or the tobacco industry. It could be very wide ranging, and any company in an industry that is subject to public criticism could designate itself as doing something shady, so that it has to hide its operations. If we had legalised brothels, as in New Zealand, the companies running those brothels, which might indeed be indulging in nefarious activities, would want to hide in the same way.
	We are obviating any principle of shareholder democracy. If shareholders want to mobilise and organise themselves, and want to try to gain some countervailing power to the power of the directors, they must be able to find out who the other shareholders are. That is a big job when the company is a multinational or a bank with thousands, or possibly millions, of shareholders. It is an enormous job for shareholders to organise themselves against directors, given the weight and strength that directors have as a result of all their proxy votes, which they accumulate and use, ad lib, to crush the emergence of any shareholder opinion. That is an impossible job unless the names of the shareholders are published.
	If we want to encourage investigative journalismthere is not enough investigative journalism in this country; things are handled far better in Americajournalists must be able to investigate who the shareholders of the company are, so that they know what the company is about and what it is doing.

Paul Farrelly: May I give my hon. Friend an example? I once investigated a publicly quoted company that was suspected of involvement in laundering money from one of the former Soviet republics in Asia. The investigation proceeded through an examination of the company's shareholder register, and the shareholder register of companies that were in turn its shareholders, and links to some rather unsavoury characters were found. If I were running such a company, and the new clauses were added to the Bill tonight, the first thing that I would do is apply under the scheme. I would say, My company operates in a former Soviet republic where violence and torture go on all the time. There is a serious risk of my shareholders being targeted if you do not keep their identities secret.

Austin Mitchell: I am grateful to my hon. Friend, who was of course in the investigative journalism tradeand a very good trade it is, too. I was in the electronic media, so we did not do any investigation. We just shouted at people, which was perhaps a mistake; perhaps we conducted ourselves at too low a level.
	The principle is absolutely clear. We cannot accept either of the new clauses, because under new clause 17 the onus on companies is replaced by an onus on shareholders to say, I am investing in something murky, please do not disclose my name. That does not apply only to people who want to hide from possible persecution. The ability to remain anonymous, which would be checked by my amendment No. 758, is also used by tax evaders, money launderers and criminals. Will they, too, on the same principle, have the ability to hide? Or will they put all their money in Huntingdon Life Sciences and then hide themselves?

Paul Farrelly: My hon. Friend talks of criminals and fraudsters. The hon. Member for Cambridge (David Howarth) says that applications made under the new clauses would be scarce, but he tends to underestimate the ingenuity of fraudsters. If I were a fraudster, given this provision and certain precedents that may be set by decisions taken by the Secretary of State, I would wish to put my company in the position where I could claim that my shareholders were subject to the risk of violence and intimidation. For instance, I might have two people in an office putting drops in a rabbit's eyes, or I might set up a small subsidiary in a violent place. I could therefore close my shareholder register and prevent legitimate investigation of the various connections that my company has, if they are unsavoury.

Austin Mitchell: I am grateful to my hon. Friend for making that point.

David Howarth: If what the hon. Member for Newcastle-under-Lyme (Paul Farrelly) says is true, companies, by applying for this protection, would be fingering themselves as potential fraudsters, so the risks to them would be quite great. Therefore, they would not do it.

Austin Mitchell: I am glad to see that the Liberal faith in human virtue and the virtue of companies lives on. Lots of organisations have something to hide, and lots choose to hide it. I do not want to provide any more opportunities for them to do so. New clauses 16 and 17 provide massive, unnecessary machinery to deal badly with something that, I am afraid, must just be accepted and can be dealt with in other fashions, and for which we should not breach the principle of full openness or full sunshine. My amendment No. 758 sustains the fundamental principles on which the new corporate identity was given to joint stock companies. If somebody is to be responsible, the legal personality created for the convenience of business must be rooted in identifiable shareholders whose names are known and whose interests can be investigated.
	Amendment No. 683 is an effort to control the big trade in companies bought off the shelf. The technique is widely used by money launderers. Money laundering would be extremely difficult were it not for accountancy firms having the ability to set up shell companies in that way. I wrote an article about a money laundering racket by AGIP some years ago, in which Grant Thornton established shell companies in Jersey to launder money from that interest. It goes on all the time. Enron used it spectacularly on an enormous scale. If we are to deal with that issue, we need to know who the beneficial owners are, who is setting up the company and who is answerable. Currently, there is no requirement for third party agents such as accountancy firms who submit company formation papers to Companies House to collect and verify the ownership information for the company. Therefore, owners can conceal their identities and carry on their nefarious business. The principle of full openness, for which I am speaking, should therefore be extended to cover such shell companies. We should maintain that principle, not infringe it.

Douglas Hogg: I shall confine myself to new clauses 16 and 17, and largely to new clause 16. I acknowledge that my hon. Friend the Member for Huntingdon (Mr. Djanogly) has a serious point and is right to put forward the new clause. In its present form, it is not satisfactory and needs adjustment, but I understand and agree with the general motive that lies behind it. The Government are right that clause 117 goes some way to address the problem, and they are to be congratulated on having put it into the Bill. There are at least three problems with clause 117, however, which cause me to think that an additional provision, along the lines of that put forward by my hon. Friend, is necessary.
	The first problem with clause 117 is the proving of motive. Motive is often difficult to prove. In this instance, it is likely to be particularly difficult to prove and the courts may therefore be unable to determine what it is. A second, and quite different, problem is that even when it is possible to have an idea of the motive, it may not be so easy to show that it is not a proper motive. That takes me to my third point: what is a proper motive, or an improper motive? I can understand why the Government have not sought to define proper purpose, but the phrase is pretty opaque, and an opaque phrase is not likely to be a terribly valuable safeguard.
	Clause 117 is directed primarily at motive, while new clause 16 is directed primarily at consequence. They are not the same. A person may have a perfectly proper motive for finding out addresses, but if those addresses fell into the hands of a third party who was not so properly motivated, that might well constitute a serious risk. There is not the necessary overlap between clause 117, which is directed at motive, and new clause 16, which is directed at consequenceas, indeed, is new clause 17.
	I think that there is room for something similar to what my hon. Friend the Member for Rutland and Melton has suggested in the new clauses, but I cannot support him all the way. I agree with the hon. Member for Great Grimsby (Mr. Mitchell) about the desirability of transparency and openness, and I well understand what was said by the hon. Member for Newcastle-under-Lyme (Paul Farrelly) about investigative journalism. Those points are well founded.
	I suggest something along these lines. First, along with the test of riskand I have no particular objection to the Secretary of State exercising that powerthere should be a test of proportionality and of public interest, which should apply in the first-instance test, the application to the Secretary of State. Secondly, there should be some mechanism, over and above judicial review, whereby the Secretary of State's decision could be reviewed in a court.
	Let me make two points about that. First, the test of proportionality and public interest should be a test to which the appellate tribunal should be specifically directed. Secondly, the right to make an application to the appellate court should be open to third parties who feel aggrieved by it, such as the press. There is a precedent of a kind. As you will doubtless know, Madam Deputy Speaker, judges in criminal courts can make orders restricting the publicity given to parties to the proceedings. In those circumstances, third parties have a right to apply to the court for a change in the order. I have something rather similar in mind. If a third party felt that the order was unduly restrictive, that third partyalthough not party to the application to the Secretary of Statewould have the right to lodge an appeal.
	Finally, I would enlarge the subsection dealing with prescribed circumstances to include classes of person and organisation. Circumstances is a fairly narrowly defined word. I should like the definition to be widened so that the information could be given to persons and organisations specified by the Secretary of State and/or the court on appeal.
	I think that there is a great deal of force in what my hon. Friend the Member for Huntingdon has said, but I am unhappy with the new clause as currently drafted. If my hon. Friend puts it to the vote I shall support it, but I shall do so on the basis that it will be amended in the other place along the lines that I have taken the liberty of describing.

Elfyn Llwyd: Having listened carefully to all the arguments, I think that this has been a very interesting debate of the highest calibre. I hope that my few remarks will not detract from that quality.
	I see the point of clause 117, and I see a great deal of merit in what the Government have done. I also commend what was said by the hon. Member for Great Grimsby (Mr. Mitchell). There is a balance to be struck. On the one hand, there is the legitimate right of the public to know who the registered shareholders are. That relates to the veil of corporate liability that forms part of the history of company law. All that is fine and rightly understood, and we are all in favour of making everything as translucent and transparent as possible. The other side of the balance, as the Government recognise, is that we live in dangerous times. There are legitimate companies carrying out their business, yet their people are being threatened for no good reason.
	I fully acknowledge what the hon. Member for Newcastle-under-Lyme (Paul Farrelly) and the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) said about investigative journalism. What they said is very important.

Paul Farrelly: I do not want to be thought of only as an old hack speaking up for my old trade, as the same points that can be made about investigative journalism apply to investigations more generally, including law enforcement and regulation. Another important point is that in these circumstances, speed is often of the essence, as any blocks can be used in the sense of buying time in either rectifying or forging the real situation.

Elfyn Llwyd: The hon. Gentleman makes that point again and I listen carefully to what he says.
	One of my concerns about clause 117 is that it provides an open-ended invitation for applications to be made. As was observed earlier, a person making an application may have a friend who makes a slightly different one and so forth. Are we putting something of a legal treadmill in place? I do not know; time will tell. What I do know is that the provision represents an effort in a very difficult area to meet the genuine concerns of people who are desperately worried about terrorism from animal rights protesters, for example. I share that concern, but no doubt the Solicitor-General will advise us in due course that there will be some form of review of the court's decision along the usual lines.  [Interruption.] I believe that he confirms that.
	Speaking rather like a Lib Dem, I have reflected on both sides of the argument and I also have considerable sympathy with new clause 16, but I am not sure that leaving the matter for a judicial review is the right way forward. It is an imperfect appellate procedure. I defer to the right hon. and learned Member for Sleaford and North Hykeham on the points that he made, but the judicial review procedure would look into the reasonableness of how the decision was reachedthe Wednesbury principles and so forthrather than the quality of the judgment. That is essence the of the matter. That is why I say that it is an imperfect appellate procedure and why I do not feel able to support the new clause.
	We have had an interesting and important debate. I hope that the Solicitor-General will deal with the several points that have been raised in what I view as a most invigorating debate.

Mike O'Brien: I agree with the hon. Gentleman that we have had a very good and high-level debate. All the contributions have showed the great deal of seriousness with which the issues have been considered. I particularly thank my hon. Friends the Members for Newcastle-under-Lyme (Paul Farrelly) and for Great Grimsby (Mr. Mitchell) for setting out their strong objections to the Opposition new clauses. Both my hon. Friends are ex-journalists who are greatly concerned about the impact of the Conservative proposals on investigative journalists seeking to expose scandals in big companies, for examplea point that everyone will want to take account of.
	The hon. Member for Huntingdon (Mr. Djanogly) also made some important points about the dangers resulting from animal rights terrorists and others who seek to damage not just individuals, but the biotech industry itself. I share his concerns about Huntingdon Life Sciences, when individual employees of the company as well as other organisations that supply it have been subjected to attacks by animal rights terrorists. I have talked to employees of Huntingdon Life Sciences who have been the victims of having their cars blown up outside their homes with fire bombs.
	The Government recognise the dangers of such activity and we have passed legislation in recent years to tackle the intimidation, harassment and other criminal acts that have been a feature of animal rights terrorism. The issues have been addressed to a considerable extent by the criminal law and the Government take them enormously seriously. Company law has a role, but it is a limited role. Clause 117 provides safeguards for those who may feel threatened, and it will enable the courts to intervene and provide some security for individuals who feel at risk. I shall return to that point in due course.
	Let me deal more broadly with the new clauses and amendments. On new clauses 16 and 17, I begin by quoting the contribution of the hon. Member for Huntingdon in Committee. He said:
	There must be a balance and proportionality between access to a register and security for those on it. [ Official Report, Standing Committee D; 22 June 2006; c. 183.]
	I agree with that. The issue we need to consider is where that balance is struck. I fear that to deal with the real problem of animal rights terrorism his proposal is to change public access to the register of membersan issue deeply embedded in our company lawin a way that could well have adverse consequences.
	Ever since it has been possible to set up a company with a separate legal identity, the law has required the names and addresses of both those who own the company and its directors to be on the public record. As long ago as the 1840s, when Gladstone's committee on joint stock companies reported, the lack of transparency about company shareholdings was seen as a major problem. By instituting a system of registered membership, Gladstone's committee wanted to suppress such practices as
	concealing the names or preventing the meeting of the Shareholders...falsifying the books containing transfers of shares
	and
	the creation of fictitious votes, so as to secure the means of outvoting the bonafide Shareholders.
	Of course, Mr. Gladstone and his colleagues did not have to contend with animal rights terrorists or boiler room investment scams, but the basic reasons for giving public access to the register, beyond those of investigative journalism, still hold good today.
	It is fundamental to shareholder democracy that members can hold the management of their company to account. To do that, they need to be able to contact each other and, sometimes, to be contacted by the general public. Company law must ensure that shareholders can be contacted without any risk of interference or hindrance from the directors. The impact of the changes proposed by the Conservatives would run counter to that basic view of shareholder democracy. Indeed, some of the other amendments that they have put forward could have a profound effect on our company law.
	New clause 16 would remove the essential underpinning of shareholder democracy. If a company were to have a confidentiality order under the new clause, all external communications to its members would be required to be passed on only by the company. How, and how quickly, is not specified, but speed is crucial if support is being sought, for example, for a resolution opposing one already tabled. How is someone seeking to convey a lawful message ever to know whether the company has complied with the request to pass the message to its members if he does not have the means to contact them? The enforcement mechanisms in subsections (9) to (12), and therefore the underlying obligation to pass on lawful messages, are worth nothing if a company's failure to pass on those messages is undetectable, and there is nothing in the new clause to show how it could be. However, under clause 117, courts could deal with that problem.
	The new clauses do not substantially add to protection that can be achieved under clause 117 and that can be done be much more effectively by using the courts. The clause provides that, when a court directs a company not to comply with a request for access to its register of members, it may direct the company not to comply with similar requests. In other words, if it becomes clear that a company's register of members has become the target of animal rights extremists or fraudsters, it should be possible for the court to make an order in terms that permit it to refuse requests for access that appear to emanate from similar sources. That makes unnecessary the provision in new clause 16 for company confidentiality orders, unless there is some fundamental view that that has to be done via the Secretary of State in a particular way, rather than in the courts.

Jonathan Djanogly: Is the Solicitor-General therefore saying that under the existing provisions in the Bill, a court would be able to close the register?

Mike O'Brien: What I am saying is that, under clause 117, the court can enableorder, in facta company not to provide information requested. So the company will be in a position to make such order as it believes is appropriate when an application is made. The court would then be able to deal with concerns about shareholder democracy and other issues, which might properly be raised by shareholders. But there is nothing in new clauses 16 and 17 that would enable that to occur.
	New clause 16 would also have unwarranted side-effects. Entry in the register of members is evidence of a member's entitlement. That would be lost for any company with a confidentiality order. The loss of the ability to check the register would create a risk that registers of private companies with confidentiality orders would not be properly maintained.

Douglas Hogg: May I make a suggestion to the Solicitor-General that might meet his concernand also, perhaps, that of my hon. Friend the Member for Huntingdon (Mr. Djanogly)? One could enlarge the test in clause 117(3) so that the court could make an order where the
	copy is not sought for a proper purpose,
	or wherewe could use a phrase such as disclosureit would expose individuals to unreasonable risk. So one could build into clause 117 some of the concepts put forward by my hon. Friend, but have the policing done by the courts.

Mike O'Brien: I hear what the right hon. and learned Gentleman says. However, subsection (4) states:
	If the court makes such a direction and it appears to the court that the company is or may be subject to other requests made for a similar purpose...it may direct that the company is not to comply with any such request.
	So there is a considerable amount of discretion for the court. The court is in a position to be able to make appropriate orders, as it thinks fit in the circumstances that it is facing.

Douglas Hogg: Let me explain the point that I am trying to put to the Solicitor-General. There is a difference, and no necessary overlap, between not having a proper motivethat covers motiveand consequences. I think that one could get evil consequences in terms of risk, even if the application was made for a proper motive. So I think that the two tests should perhaps be incorporated into clause 117.

Mike O'Brien: Let me consider for another time the idea put forward by the right hon. and leaned Gentleman. I do not dismiss it; it is a sensible suggestion. If we were currently in Committee, we might have had the opportunity to look into it in more detail.
	New clause 17 provides that an individual member may apply for a confidentiality order so that particulars of his name and usual or business address are not publicly available. Everything that I have said about new clause 16 applies to new clause 17 as well. Transparency about membership is one of the conditions that a company and its members must observe in return for the privileges that come with incorporation. It would be fundamentally wrong for it to be possible for any individual to hide the extent of his control of a company. That said, we intend to use the power in clause 861 to reduce the information about members that companies with share capital have to send to Companies House each year as part of their annual return.
	Subject to consultation, our intention in respect of public companiesthe hon. Member for Huntingdon asked me to make a point of thisis to exempt them from the obligation to supply any details of those who hold less than 5 per cent. of any class of the company's shares, and for private companies not to require the addresses of their members. That is a practical way of ensuring that the protection provided to registers of members by clause 117 is not subverted by the availability of this information from Companies House. By way of contrast, new clause 17 is in our view wholly incompatible with the concept of a public record.

Jonathan Djanogly: I thank the Solicitor-General for clarifying that point; he has cleared up certain inconsistencies and his comments will be very well received by the business community. When are those regulations likely to be introduced?

Mike O'Brien: We want to consult on and discuss them. We do not anticipate any substantial delay, but let us see what emerges from the consultation before I start giving time scales.

Paul Farrelly: Given what my hon. and learned Friend has just said, could he make it clear to me, as a former frequent user of Companies House, that what he has said would not preclude me or journalists from writing to a company asking for a shareholder register, as we currently can, if that information is not available from Companies House?

Mike O'Brien: Yes, my hon. Friend could still write to a company requesting that information. It would then be a matter for the company to decide whether there was a good reason not to disclose it, and to make any court application that it might wish to make, should that be necessary.
	On clause 117 and the question of motive, although I take the argument of the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) against that clause very seriously, it is important that a court be able to examine whether the purpose of a person making such an application is proper. That is not a vague concept; it gives some discretion to the courts, but it is not so vague that a court will be unable to identify that an improper purpose relates to, for example, animal rights terrorism or to an attempt somehow to damage the company in question. We need a provision that allows us to look at motive rather than mere risk, which was the distinction that the right hon. and learned Gentleman made. In my view, clause 117 gets the balance right.

Paul Farrelly: Does my hon. and learned Friend not recognise that the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) has raised some fundamental objections to the provisions as drafted, which are additional to the basic objections raised by me, and by my hon. Friend the Member for Great Grimsby (Mr. Mitchell)? The right hon. and learned Gentleman has said in an incisive contribution that, after six or seven weeks considering the Bill in Committee, these provisions are seriously flawed.

Mike O'Brien: The right hon. and learned Member for Sleaford and North Hykeham damned with faint praise the new clauses proposed by the Conservatives, but some of the points that he made about the lack of an appeal process were damaged beyond all recovery by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who made it very clear that if judicial review had to be relied on, we would be looking at Wednesbury unreasonableness and a whole series of other problems arising from the inadequacies of that form of appeal. To be fair, the right hon. and learned Gentleman suggested that the appeal issue would have to be dealt with in another place, and he identified the problems with the new clause very well.

Douglas Hogg: In fact, the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) and I were in total agreement. Both of us said that judicial review was not an adequate mechanism and that we needed a specific appeal mechanism with stated criteria.

Mike O'Brien: I note what the right hon. and learned Gentleman says.
	Amendment No. 383 would give every shareholder of a quoted or publicly traded company the right for their home address not be publicly available either through the company or Companies House. That is simply not necessary. There is no requirement for the home address of any member of any company to be publicly available anywhere. All that clause 113 requires is
	the names and addresses of the members.
	That is the same as the current requirement in section 352 of the Companies Act 1985. The Bill makes it clear elsewhere that an address for service, such as a PO box, is all that is required. We are talking about something for the purpose of communicating with the member and a way in which the member can be easily contacted. That is the objective of the exercise. In any event, a large and increasing proportion of individual investors in quoted companies and publicly traded companies hold their shareholdings through nominees so their names and addresses do not appear in the register at all.

Paul Farrelly: Does my hon. and learned Friend share my puzzlement that, at this stage, on the Floor of the Housewe are not in Committee, using probing amendments to score debating pointsthe Conservative Opposition are advancing an amendment that would drive a coach and horses through any effective regulation or shareholder protection, having gone through all the processes of trying to refine and make acceptable their new clauses 16 and 17, which would be made redundant by this sort of approach?

Mike O'Brien: I agree with my hon. Friend, and I would not seek to defend the patent inadequacies of the Conservatives' new clauses.

Jonathan Djanogly: May I help the Solicitor-General in his answer to the hon. Member for Newcastle-under-Lyme (Paul Farrelly)? Frankly, these provisions came in at a late stage in the other place, and we have been fighting to make up for lost time.

Mike O'Brien: After much complaining by the Conservatives that there was inadequate time to deal with the Bill, we managed to finish business early yesterday. We did not need all the time that was allowed under the programme motion. The Conservatives complain a lot about the time available, but when they are offered time they do not seem to use it very well. However, we should not let the debate degenerate. It has been a good debate. I want to focus on the real issues.
	On boiler room scams, which were mentioned by the hon. Member for Huntingdon (Mr. Djanogly), under Government legislation introduced on 1 May 1999 and replaced on 11 December 2003 by the Privacy and Electronic Communications (EC Directive) Regulations 2003, it is unlawful to make unsolicited direct marketing calls to any individual who is registered with the telephone preference service. That is a whole lot easier than applying for an individual member's confidentiality order as suggested in the amendment. The Bill provides that a court may relieve a company from the obligation to allow access to its register if the court is satisfied that the access is not sought for a proper purpose. We consider that that strikes a balance between, on the one hand, protecting members from attempts to harass or defraud them, and, on the other hand, the right of the public and members to know who owns a company and to contact them. New clauses 16 and 17 would destroy that balance.
	As for amendment No. 384, there was a debate on this issue in Committee, so I shall be brief. Fifteen days is too long a period to allow in all cases where a company is considering a request for access to the register. Let us suppose that a shareholder is trying to contact other members about a resolution that has already been tabled for a general meeting that has been calledparticularly an extraordinary general meeting on 14 days' notice. In such a case, giving the company 15 days to process the request enables the management to frustrate the shareholder's purposes without even having to justify themselves in court. Moreover, the difficulties of assessing requests for access can be overstated. At the risk of generalising, I suspect that the assessment process will rarely involve detailed research or analysis. A request will either look suspect, or it will not. In our view, five daysremember, that is five working dayswill be enough.
	Amendment No. 758 addresses a rather different topic. It proposes that companies' registers of members should include details of not just the registered members, notably the legal owners of shares in companies limited by shares, but the holders of any underlying economic interests in the company that may stand behind its registered members. In other words, it would lead to a register not just of legal entitlements, but any related beneficial interests. I must tell my hon. Friend the Member for Great Grimsby (Mr. Mitchell) that we would not be prepared to accept such a huge change at this stage. It would represent a huge change not only in company law, but to the way in which all sorts of perfectly legitimate businesses are run.
	If one thinks about what the amendment would mean in practical terms, it soon becomes clear that however desirable it might be in certain circumstances as a matter of principle, it would have undesirable consequences in other cases. It would also probably fail to achieve many of its objectives, even if it did not simply prove to be unworkable. The first question is how on earth one would enforce a universal requirement to disclose beneficial interests in companies. A company will generally be unaware of the identity, or even existence, of those who hold such interests. Even the registered member may not have all the information if he is only the first link in a chain of intermediaries between the company and those with the underlying economic interest in its shares. If the requirement is unenforceable, it is likely that any criminal elements that might benefit from the limitations of the existing system will also be able to find a way round the proposed new system.
	An equal worry is that compliance with the proposed new system would impose hugely increased costs on investors, companies and the financial services sector because of the capturing and processing of all the additional information required, without, I regret to say, delivering any benefits commensurate with those costs. If I give a single example of which my hon. Friend might not have thought that is taken from an everyday situation, it might illustrate the complexities involved.
	People who live in flats often have a share in the company that owns the flats. They also often have mortgages, and it is common for the lender to be in a position to require the resident of a flat's share to be transferred to the lender. That gives the lender a beneficial interest in the share. The amendment would require the register to identify the lender's beneficial interest and to update that information every time the resident switched to a different lender, as often happens, or whenever the lender was taken over by another institution, which also often happens. None of that would serve any especially useful purpose. Okay, we could deal with that problem by way of a further amendment to exclude such situations, but the example shows us the sort of unforeseen consequences that might arise from the amendment.
	Finally, it is worth pointing out that there are already powerful statutory mechanisms, at least for public companies, that enable companies to get to the bottom of who might be behind their registered members. These will shortly be supplemented by further measures under the transparency obligations directive. When such mechanisms are used, there is provision for records to be kept of the beneficial owners whose interests have been identified and for those records to be disclosed.
	My hon. Friend also spoke to amendment No. 683. Clauses 10 and 11 contain powers that enable the Secretary of State to prescribe in regulations made under the Bill the types of identity information that must be provided in the statements that are to be included in the application for registration, which are the statement of capital and initial shareholding that is required when a company is to be formed as limited by shares and the statement of guarantee that is required when a company is to be formed as limited by guarantee. Given those circumstances, I think that the amendment is unnecessary, because we will achieve the result that my hon. Friend wants, albeit by a different route. We are not especially attracted by the particular wording of the amendment, although I appreciate that that could be altered. However, I hope that my hon. Friend will accept that we achieve the result that he wants through the route already provided for, rather than by using the route that he proposes.
	Government amendment No. 222 is a minor amendment that will clarify the Bill. I do not think that it will give rise to any controversy, but I will be happy to answer questions on it if necessary.

Jonathan Djanogly: We have had a full debate on this group of amendments, and unfortunately time is now short. The Solicitor-General mentioned the programming. I have just had a quick look and can advise him that under the timetable we have so far been unable to discuss even half of the groups of amendments tabled by the Government. He referred to finishing early last night, but failed to mentioned that one and a half hours had been provided for debate on a single group of amendments.
	The hon. Member for Great Grimsby (Mr. Mitchell) says that we should support openness, transparency and access to registers. I do not disagree with any of that; however, in certain exceptional circumstances there will be a need to restrict access, and that need is not currently catered for.
	The hon. Member for Newcastle-under-Lyme (Paul Farrelly) repeated many of the arguments that we heard in Committee. He has acted as a good sounding board and we have learned from many of his comments, especially those in support of investigative journalism.
	I thank my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) for his constructive remarks. We shall consider what he has said today as the legislation progresses.
	To summarise, we believe that there will be circumstances in which companies and individuals should be able to ask for protection. The Secretary of State is mentioned in the new clause, but if the Government took a constructive approach, we could consider providing for a court process. Companies and individuals should be able to receive protection. That is why we shall press new clause 16 to a Division.

Question put, That the clause be read a Second time:
	 The House divided: Ayes 208, Noes 300.

Question accordingly negatived.
	 Question, That amendments Nos. 209, 254, 210 to 212, 161, 222, 305, 223 and 306 be made,  put and agreed to.

Clause 270
	  
	Private company not required to have secretary

James Brokenshire: I beg to move amendment No. 358, in page 128, line 21, at beginning insert 'Subject to subsections (3) and (4)'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
	No. 359, in page 128, line 21, at end insert
	'but may at its discretion appoint a secretary (or joint secretaries)'.
	Government amendments Nos. 771 and 772.
	No. 360, in page 128, line 22, after 'company', insert 'not having a secretary'.
	No. 361, in page 128, line 32, at end insert
	'(3) In the event that a company is not entitled to the exemption conferred by section 485(1) (small companies conditions for exemption from audit) in respect of its last completed financial year, the company shall be required to appoint a company secretary within three months of the date that the directors first became aware that such exemption would not be available to the company.
	(4) In the event that subsection (3) shall apply, the relevant company shall be required to have a company secretary until such time as the company satisfies the conditions contained in subsections (2) or (3) of section 485.'.
	No. 363, in clause 272, page 128, line 36, leave out 'public'.
	No. 364, page 128, line 36, at end insert 'section 270 or'.
	Government amendment No. 773.
	No. 365, in clause 274, page 130, line 7, leave out 'public company' and insert
	'company required to have a secretary under section 270 or 271'.
	Government amendments Nos. 366, 367, 776, 368, 304, 441, 369, 370 and 728.
	No. 24, in clause 281, page 132, line 29, at beginning insert
	'( ) An authorised corporate signatory is a person who, by virtue of his office, is authorised to sign documents of any description on behalf of the company.'.
	No. 371, page 132, line 31, leave out 'in the case of a public company,'.
	No. 25, page 132, line 34, leave out subsection (2).
	Government amendment No. 729.
	No. 372, in clause 282, page 133, line 3, leave out ', in the case of a public company,'.
	Government amendments Nos. 373 and 731.
	No. 374, in clause 284, page 133, line 28, after 'company,', insert
	'(aa) in the case of a private company which has appointed a company secretary, that its secretary (or any of its joint secretaries) are also authorised signatories in relation to the company,'.
	Government amendment No. 732.
	No. 375, in clause 285, page 134, line 7, at end insert
	'provided that in the case of a director or secretary of the company this requirement shall be satisfied by the insertion of the statement set out in section 284(3)(b).'.
	Government amendments Nos. 733, 734, 723 to 727, 781, 735, 782, 783, 736, 737, 764, 765, 721, 766, 722 and 767 to 769.

James Brokenshire: Let me first declare my interest in the business under discussion. Although I am a non-practising solicitor, before entering this House I advised on company law for some 14 years. I therefore draw hon. Members' attention to the entries appearing by my name in the Register of Members' Interests.
	I should also like to put it on record that this is the first time that I have had the opportunity to address the House from the Front Bench. It is an honour and a privilege to be able to debate several key aspects of this very important Bill on behalf of Her Majesty's Opposition. My only regret is that the timetabling means that we do not have as much time as we would like to debate some of the issues.
	The amendments relate to parts 12 and 13 and the continuing position of company secretaries within the corporate environment. Before speaking to our amendments, I want to say how much we welcome the about-turn that the Government have made on this issue. The amendments tabled by the Government give proper statutory recognition to company secretaries in private companies. Conservative Members have argued steadfastly that the company secretary performs a crucial role in ensuring good corporate governance and legal compliance, as well as fulfilling several important administrative tasks within the company. Secretaries are also officers of the company with the legal liabilities that that brings with it, and have a recognised ability to sign documents on behalf of the company.
	Until now, the Government have said that there is no need to recognise private company secretaries in the Bill. While they implemented greater flexibility on the need for private companies to have a secretary, they argued quite forcefully that there was no need to keep any records of such persons if the secretary was appointed by a private company, or for third parties to have any automatic ability to check whether somebody was a company secretary. The Government said that if the secretary was appointed and there was a need for such a secretary to sign documents on behalf of the company, they would have to be appointed as an authorised signatory under part 13. During our debate in Standing Committee, the Solicitor-General did not appear to have any concerns about the approach that was being taken, telling me:
	Private companies should have a greater degree of freedom and choice. We believe that that will not lead to any significant problems and that this deregulatory approach is the better one.[ Official Report, Standing Committee D, 27 June 2006; c. 264.]
	The problems of implementation and the effect of the Government's proposals have forced them to revise their whole stance. The Institute of Chartered Secretaries and Administrators set out the position well, saying:
	For any of the 2 million private companies which find their secretary useful, and want to continue employing such a person, there will be the confusing burden of having set up appropriate authorisations to try and mimic the current statutory powers that are well understood.

Mike O'Brien: rose

James Brokenshire: I will try to allow some time for the Solicitor-General to respond, but we are short of time, as he will realise.
	Not only did the revised arrangements cause problems, but the CBI suggested that the authorised signatory route would
	impose significant additional burdens on business compared with the existing regime, whilst imposing criminal sanctions for non-compliance. With the requirement for an authorised signatory to be an individual, these provisions also prevent corporate secretarial service companies acting as an authorised signatory.

Stephen O'Brien: As a member of ICSA, as declared in the register, I welcome the Government's about-turn and hope that they can now see their way to making the final changes to ensure that we have the final agreement.

James Brokenshire: I entirely endorse my hon. Friend's comments.
	Our only point of difference with the Government relates to the need for good corporate governance and a secretary's role in that, and whether it should apply at the plc level or lower down the scale. We still argue firmly that it should be the latter, but I do not have time to develop those arguments further.

Mike O'Brien: I welcome the hon. Member for Hornchurch (James Brokenshire) to the Front Bench. However, in the amendment, he confuses the whole subject of private companies and tries to introduce new criteria. He should trust private companies to make the decisionswe do not need the nanny state to interfere. The amendment shows the Conservatives trying to impose more regulation on companies when it is not needed. We should reject it.
	 Amendment negatived.
	 It being half-past Five o'clock, Mr. Deputy Speaker,  put forthwith the Questions necessary for the disposal of the business to be concluded at that hour, pursuant to Order, [17 October].
	 Question, That amendments Nos. 771 to 773, 366, 261 to 264, 367, 776, 368, 304, 441, 369, 370, 728, 729, 373, 731 to 734, 207, 723 to 726, 347, 727 be made, that new clause 7 be brought up, read the First and Second time, and added to the Bill and that amendments Nos. 474 to 476, 510, 477, 478, 511, 479, 512, 513, 145 to 150, 208 and 151 be made,  put and agreed to

New Clause 81
	  
	Enforcement of directors' liabilities by shareholder action

'(1) Any liability of a director under section 376 is enforceable
	(a) in the case of a liability of a director of a company to that company, by proceedings brought under this section in the name of the company by an authorised group of its members;
	(b) in the case of a liability of a director of a holding company to a subsidiary, by proceedings brought under this section in the name of the subsidiary by
	(i) an authorised group of members of the subsidiary, or
	(ii) an authorised group of members of the holding company.
	(2) This is in addition to the right of the company to which the liability is owed to bring proceedings itself to enforce the liability.
	(3) An authorised group of members of a company means
	(a) the holders of not less than 5% in nominal value of the company's issued share capital,
	(b) if the company is not limited by shares, not less than 5% of its members, or
	(c) not less than 50 of the company's members.
	(4) The right to bring proceedings under this section is subject to the provisions of section (Enforcement of directors' liabilities by shareholder action: supplementary provisions).
	(5) Nothing in this section affects any right of a member of a company to bring or continue proceedings under Part 11 (derivative claims or proceedings).'. [Margaret Hodge.]
	 Brought up, and read the First time.

Margaret Hodge: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following:
	Government new clause 82 Enforcement of directors' liabilities by shareholder action: supplementary.
	Government new clause 83 Trade unions.
	New clause 76 Expenditure on lobbying
	'(1) A company must not in any financial year incur expenditure on lobbying activity in excess of the limit then in force, unless the expenditure has been authorised by a resolution of the members of the company.
	(2) The provisions of sections 372(2) to (5), 372(6)(b), 372(7), 373(1), 373(2), 373(4), 373(6), 373(7), 374 and 375 to 379 shall apply to a resolution under this section.
	(3) The Secretary of State shall have power to make regulations, which shall be subject to the affirmative resolution procedure, to
	(a) set the limit, and
	(b) exempt, to any extent the Secretary of State sees fit, expenditure incurred by companies in responding to requests for information initiated by governmental or parliamentary bodies,
	but if the Secretary of State fails to set the limit, the limit shall be 1,000.
	(4) Companies must report expenditure on lobbying activity in excess of the limit in a form to be specified by the Secretary of State by regulations, which shall be subject to the affirmative resolution procedure.
	(5) Failure to comply with reporting requirements established under subsection (4) shall count as a violation of the duty to keep accounting records under section 392 and shall be punishable in accordance with section 393.
	(6) This section applies to overseas companies, as defined in section 1011, as well as to UK companies, and the powers of the Secretary of State in Part 34 shall be deemed to include a power to require overseas companies to report their expenditure on lobbying activity in excess of the limit.
	(7) Lobbying activity means any activity intended directly or indirectly to influence legislation or policy at any level of government in the United Kingdom.'.
	Amendment No. 687, in clause 372, page 168, leave out lines 34 and 35 and insert
	'(3) Subsection (2)(b)(i) shall not apply where a company is a wholly owned subsidiary of a UK company.'.
	Government amendments Nos. 647 and 708 to 711.
	Amendment No. 376, in clause 380, page 173, line 12 [Clause 380], at end insert
	'provided that it satisfies the conditions set out in subsection (3).'.
	Amendment No. 377, in page 173, line 15, at end insert
	'(3) The conditions are that the trade union currently has in force a political resolution authorising the trade union to apply its funds in the furtherance of political objects and such political resolution authorised donations or expenditure under one or more of the following heads
	(a) donations to political parties or independent election candidates,
	(b) donations to political organisations other than political parties, and
	(c) political expenditure,
	in each case up to a specified amount in the period for which the resolution has effect; and for this purpose political resolution shall have the meaning set out in the Trade Union and Labour Relations (Consolidation) Act 1992 (c. 52) save that the reference in section 73(3) of such act to ten years shall be deemed to be four years.'.

Margaret Hodge: The funding of political parties is a topical issue, with implications for all hon. Members and parties. However, I hope that we all recognise that, in the debate, we are considering the matter from the perspective of companies and their members, and how and when directors of companies need to obtain authorisation from their members before making a political donation or incurring political expenditure.
	The company law interest in the matter arises from the possibility that a director might put his personal interests or those of a political organisation before those of the company. In other words, a director might experience a conflict of interest when making a political donation or incurring political expenditure. The provisions therefore have an important but limited purpose. Company law is not an appropriate vehicle for delivering wider policy objectives in relation to political funding.
	Clause 380 provides that a trade union is not a political organisation for the purposes of part 15 of the Bill. This means that funding from a company for a trade unionfor example, providing free meeting room facilities or giving employees paid time off for trade union activitiescannot be considered as a political donation requiring the authorisation of the company's shareholders. As we said in Committee, clause 380 was included in the Bill at the express request of companies that felt strongly that they should be able to provide facilities for their work force through a trade union without it being deemed political funding.
	In Committee, however, a number of hon. Members expressed concerns that the provision might allow companies to circumvent the Bill's requirement for authorisation by making donations to the political fund of a trade union, in the expectation that the trade union would make a donation to a political party. In response to those concerns, we propose to replace clause 380 with a new clause that would apply the controls of part 15 to donations made to the political fund of a trade union but to no other donations made to the union.

John Gummer: I think that the Minister will agree with what I am about to say. Does she agree that, when we are talking about these matters, even in the narrow confines of the Companies Bill, it is important to refute the attitudes of those who think that there is something wrong in financially supporting political parties of all kinds? Ought we not to say to such people that it is an important part of the nature of a democracy that political parties should be so supported, that that is an honourable thing to do, and that it is very much akin to supporting charities and other important institutions?

Margaret Hodge: I agree with almost all that the right hon. Gentleman says. I would not put contributions by individuals to political parties on the same level as contributions by individuals to charities, but the continuation of healthy political parties is an essential feature of the democratic expression of the political views of all in our community. On the whole, therefore, I agree with the thrust of his remarks.
	Our new clause will prevent companies from circumventing the controls of the Bill. If they wish to donate to the political fund of a trade union, they must seek shareholder authorisation. If they donate to trade union funding in other wayssuch as providing free meeting room facilitiesthey will not need to seek authorisation. In the latter case, there is no danger of such funds being redirected to political parties, because the Trade Union and Labour Relations (Consolidation) Act 1992 prevents trade unions from making payments to political parties, except through their political fund. That Act also prohibits trade unions from redirecting money received from third parties into the political fund unless the money is given as a contribution to the political fund. I want to underline the fact that we are not aware of any companies making such donations to trade unions as a means of circumventing the requirements applicable to political donations in this way. However, I have taken on board the request of both Opposition parties that we should make that clear in the Bill to ensure that it is not a possibility in the future.
	New clauses 81 and 82 and amendments Nos. 708 to 710 address an issue that was raised by the hon. Member for Huntingdon (Mr. Djanogly) in Committee. Under clause 376, the directors of a subsidiary company and the directors of its relevant holding company may be liable if an unauthorised donation is made by a subsidiary. Clause 377 recognises the possibility that neither the holding company nor the subsidiary may bring an action against the directors who are liable in respect of the unauthorised donation. It therefore allows shareholders to bring legal proceedings to enforce that liability. In such cases, we agree that shareholders of both the subsidiary and the holding company should be able to bring those proceedings. That is particularly important if the directors of the holding company are effectively the shareholders of the subsidiaryfor example, if it were a wholly owned subsidiary.
	As drafted, the clause would allow only shareholders of the subsidiary to bring proceedings, even against directors of the holding company. As I have explained, we do not think that that would work in practice, and these amendments address the problem by giving the right to bring proceedings to shareholders of the subsidiary and shareholders of the holding company. That will ensure that the directors of the holding company can be held to account by their shareholders if they use subsidiaries that they control to make unauthorised donations.
	I wonder whether you, Mr. Deputy Speaker, might advise me on the rest of my contribution, which is about resisting other proposals in the group. Should I deal with those now or wait for them to be spoken to and come back?

Mr. Deputy Speaker: That is entirely a matter for the right hon. Lady. She has moved the first new clause in the group, so she will have an opportunity to reply to the debate. In the meantime, she might wish to hear the particular arguments to be advanced.

Margaret Hodge: Right, I shall proceed in that way and leave my comments on the other proposals for when other hon. Members have spoken to them.

David Howarth: I shall speak mainly to new clause 76 on corporate expenditure on lobbying. We do not know the exact extent of corporate lobbying in the UK, but we can get some idea of it from the fact that expenditures on public affairs have risen rapidly over the past 20 or 30 years. In the 1980s and 1990s, leading agencies were growing at between 20 and 40 per cent. a year, and according to a study done in 2000 by Miller and Dinan, in the last two decades of the 20th century, expenditure on public relations rose thirty-onefold.
	We do not know exactly how much of that expenditure was directed at lobbying Government on Government relations, as it is called, but as Miller and Dinan point out in its study, it is hardly a coincidence that that massive growth in expenditure coincided with the era of massive privatisations and deregulation of the financial services industry. Lobbying is now a very big business.
	The services offered by Government relations companies are extensive. A particular companyI have checked its websitegives these examples of its work: changing Government policy on payouts to Railtrack shareholders, changing telecommunications policy, defending the interests of companies involved in the private finance initiative, winning political approval for a takeover bid and getting changes in the Financial Services and Markets Bill.
	Whatever one thinks about those issues, one way or the other, one thing about them that cannot be doubted is that they are political. Corporate lobbying is an intervention in the political process, just as much as, and in some ways more than, giving money to a political party or a political campaign, yet the law controlling corporate political activity, which is in the Bill, covers only activity connected with elections or referendums.
	Lobbying is not just about issues that concern individual companies; it reaches the most important issues. During the past few weeks, there has been some controversy about the activities of certain oil companiesExxonMobil in particular, and its alleged funding of climate change denial. That is an attempt to shift public policy in a way that favours the short-term interest of a company at the expense of everyone in the world.
	The growth of lobbying over the last generation brings into question the type of democracy we are. Sometimes, even when discussing the Bill, the Government, and even the Opposition, have given the impression that the purpose of government is not to put forward and defend a certain view of the public interest, but is instead merely to navigate a path between clashing special interests. Earlier today, the Minister said something to the Conservative Opposition that I think implied that she feels that this is a problem in relation to how parts of the Bill have been handledwe have spent too much time working through what various lobby groups are saying and not enough on what we ourselves think.
	Lobbying is creating a form of corporatism in which rich and powerful bodies reinforce their power and wealth by seizing control of the access to Government and excluding others. As the membership of political parties falls, and as in many parties the influence of members on the policies of those parties has declined, the space left behind in the political system has been occupied by corporate lobbyists. The result is that politics is becoming a closed circle.
	In addition, lobbying is economically harmful. Most of the massive expenditures made on Government relations are aimed simply at redistributing wealth, usually from the poor to the rich. The aim is not to increase the productive capacity of the company or the country, but simply to shift wealth from one group to another. It is, in the jargon of economists, an example of non-productive rent-seeking. The resources devoted to lobbying would, in economic terms, be much better spent on developing new products, and on selling and marketing. Resources devoted to lobbying are, in economic terms, mainly waste.
	We must do something to bring lobbying under control. New clause 76 is only the start of our thinking about that process. Frankly, I do not expect it to be added to the Bill tonight, but I hope that it will be the start of an important debate. The new clause would oblige companies to report on their expenditure on lobbying, once it exceeded a certain limit set by the Secretary of State, and to obtain shareholder approval for lobbying expenditure above that limit, in a way that is equivalent to the regime that applies to political donations.
	In Standing Committee, there were various objections to our proposal. One was that companies would have to report trivial expenses, such as the cost of a cup of coffee with a Minister or a taxi to Parliament. We dealt with that in the new clause by allowing the Secretary of State to set a minimum limit. The objection was made that the measure would inhibit the flow of information from companies to the Government, or Parliament. To deal with that, we have given the Secretary of State power to exempt expenditure on meeting governmental or parliamentary requests for information. Outside the Committee, it was suggested that there was a gap in our proposal, because it did not deal with overseas companies operating in this country, and we plugged that gap by making it clear that it does apply to them. Such companies already have to register and report their activities.
	The object of new clause 76 is to bring more transparency to the world of lobbying, but it is of help to shareholders, too. As the Minister said, one of the reasons that political donations need shareholder approval is that directors' political enthusiasms can adversely affect a company's reputation. The same is potentially true of lobbying. One might expect shareholders to be more in favour of lobbying in their company's interests than in favour of political donations, but they, too, might wonder whether managerial effort would be better spent on promoting and developing the company's products than on lobbying Government. They, too, might wonder about the effects on a company's reputation if it was found to have lobbied in a way that was enormously unpopularfor example, on the subject of climate change. The topic is important and, if the opportunity arises, I should like to press my new clause to a Division. I realise that its chances of success are slim, if Standing Committee was anything to go by, but I hope that it will be the start of a serious debate.
	I shall not press our other amendment in the group, amendment No. 687, to a Division. It is a drafting amendment, but an important one, and I hope that the Government understand the point behind it. It would amend clause 372, which is about the circumstances in which a company may make a political donation. Under the clause, a company must obtain a resolution of members. Subsection (3) is about what happens in a wholly owned subsidiary company but, obviously, in such companies, it is pointless to require a resolution of the shareholders separately from a resolution of the parent company, because they are one and the same thing. Clause 372(3) aims to prevent the requirement for two resolutions if one of them is pointless. Unfortunately, the wording of the provision it is not entirely clear:
	No resolution is required on the part of a company that is a wholly-owned subsidiary
	before it can make a donation. There therefore appears to be an enormous loophole, and all one need do to avoid making a resolution in the form required by the law is set up a wholly owned subsidiary. I hope that that is not the intention and amendment No. 687 aims to put into legislation what we all believe should be the case.
	I conclude by thanking the Minister for closing the loophole on trade union political funds that we brought to her attention in Committee. I accept that it is unlikely that that loophole has been used, but it could be used in future, so I welcome the fact that the Government have taken the opportunity to close it.

James Brokenshire: I wish to look at the treatment of trade unions in the Bill. At the end of our debate in Committee, the relevant provision said that unions were not political organisations, which, as we all know, is a legal fiction. The recent document published by the Trade Union and Labour Party Liaison Organisation on party funding made it clear that
	unions are an inseparable part of the Labour party.
	Union votes account for a third of the votes for the next Labour leader. The unions make Labour party policy through the national policy forum, and they exercise a 50 per cent. block vote on policy motions debated at the Labour party conference. How best should we address the political position of trade unions in the Bill? As the Minister said, the Government clearly listened to the debate in Committee, particularly the points made by Conservative Members, and have moved the debate forward by tabling Government new clause 83. Under subsection (1), a company does not have to submit to the approvals process prescribed in the Bill if a donation, other than a contribution to a union's political fund, is made to a trade union. Financial support from companies for trade unions to facilitate training, educational development, employee counselling and other important aspects of unions' work to promote good employment relations in the workplace would fall outside the approval requirements. That is of particular concern to many companiesindeed, that concern largely drove the inclusion of clause 372 at the outset.
	Subsection (2) makes it clear that the qualificationI have termed it a legal fictionthat a union is not a political organisation applies only in connection with political expenditure in clause 371. In other words, a company can promote or publicise a trade union's activities without the need to seek shareholder consent. That is entirely appropriate in the context of fostering positive employee relations and ensuring that employees have access to advice and guidance in the event of a dispute or a safety issue. It is worth putting on the record the fact that trade unions' political activities are framed by the Trade Union and Labour Relations (Consolidation) Act 1992, which incorporates provisions on the establishment and maintenance of the political fund and the uses to which the fund can be applied. Section 72 makes provision for the contribution of funds to political parties, as well as the distribution of materials relating to the promotion of political parties or candidates. The political fund can be used by the union only for political purposes, but I expressed anxiety about it in Committee, and I remain slightly concerned about the proposal on displacement. If a company made a donation to a trade union for non-political purposes, could it be used to free up, displace or transfer resources to the political fund for a political application? We debated the issue in Committee, and the hon. Member for Burnley (Kitty Ussher) highlighted advice from the TUC on actions taken by a union that could endanger its independence for the purposes of the 1992 Act.
	The Minister kindly wrote to me on 24 July 2006, enclosing a copy of the briefing note, for which I am grateful. It would be helpful, however, if the Minister were to respond to the following points when she sums up. First, has she obtained legal advice confirming that a transfer of funds from an employer to a union, which either displaces or frees up other resources in the general fund, which are then transferred to the political fund, would be a breach of the independence requirements of the 1992 Act, as per the advice given by the TUC in its briefing note? Secondly, does she construe the wording in new clause 83,
	other than a contribution to the union's political fund,
	to encompass direct and indirect contributions, where the purpose of the contribution was clear or where it might not be clear from the contribution that it was so intended but it had that effect indirectly?
	Amendment Nos. 376 and 377 develop a slightly different pointthe equivalence between the treatment of companies and trade unions in terms of the approval process for sanctioning political donations or expenditure. Under clause 371, companies are required to pass a shareholder resolution at least every four years. Under the 1992 Act, however, political fund ballots are only required every 10 years. The Government have argued clearly that there is a need to ensure, in the context of companies, that protections are afforded to shareholders in relation to the use of company funds for political purposes. Similar arguments also apply to trade unions. In the consultation document, Review of the Employment Relations Act 1999, the Government responded to calls for a review of the requirement for political fund ballots:
	The Government understands the case for reform. However, these ballots serve an important democratic function and ensure that union members can at regular intervals collectively authorise their union's involvement in political activities.
	In that context, the purpose behind each of the constructs seems to have a broad equivalence. If a company is required to seek shareholder approval every four years, surely it is appropriate for a trade union to be treated in the same way. The Bill cannot, by its nature, amend the underlying trade union legislation, so the amendments seek to highlight that important point in the context of company donations only. Back in 1994this was reflected in the Labour party's manifestothe Prime Minister said in an interview with  The Independent:
	In my view trade unions are an important part of our democracybut fairness, not favours, is the way we are going to run things.
	Fairness is what we are seeking in the amendments, and I hope that the Minister will consider that.
	With regard to new clause 76 tabled by the Liberal Democrats, I recognise the concern about lobbying expressed by the hon. Member for Cambridge (David Howarth), and we debated in Committee whether undue influence is a factor. To resolve the matter by putting restrictions on the company seems particularly harsh, however, given that some lobbying informs political debates, as Members on both sides of the House would recognise. Obviously, if the issue relates to political expenditure and attempts to change or to influence the way that people vote, it would be caught by the existing provisions relating to political expenditure in the Bill.

David Howarth: The difficulty is that the current definition of political expenditure is aimed solely at elections. The definition of politics that the law currently follows is exclusively electoral, so anything that does not relate to an election is not covered by regulation.

James Brokenshire: I think the point made in Committee was that the term political expenditure could be construed more widely, beyond the narrow confines of an election campaign. Something that was supportive to either an Opposition or a Government could be captured by the definition.
	I do not think that the Bill is as restrictive as the hon. Gentleman suggests. I fear that the approach adopted in new clause 76 would be more regulatory and bureaucratic, and would not achieve the greater transparency that he wants.

John Gummer: Is not the problem with the Liberal Democrat proposal that it arises from a very narrow view of what constitutes lobbying? If, for example, a European Union Government decided to try to pass internally a law that would damage British companies, the first to know about it would be the British companies. It would be important, for the sake of both their employees and their products, for them to lobby the foreign Government, the European Commission and Ministers at home in order to protect their business. Much lobbying is of that kind. We must not fall into the belief that it is alwaysas it sometimes isan unsuitable activity.

James Brokenshire: My right hon. Friend makes a powerful point. Lobbying does instruct, and can inform, the way in which we govern. To assume that all of it is bad is a very simplistic approach. To be fair to the hon. Member for Cambridge, I do not think he was suggesting that, but his new clause highlights the difficulties of trying to legislate in this way.
	I welcome the opportunity that we have had to debate the issues, but I consider this to be the start of a process that will require much more detailed consideration. We need to think about the impact of lobbying. We need to think about whether it is a good thing, which elements are bad and which may require reflection.
	There are a number of technical amendments to this part of the Bill. I have some sympathy with amendment No. 687, which attempts to make it clear that clause 372(3) does not obviate the need for the holding company of a wholly owned United Kingdom subsidiary to produce an appropriate political resolution. Although this is a technical and a drafting matter, I think it worth putting on record, and I hope that the Minister will consider it.
	New clause 81 provides further clarification of enforcement rights in connection with holding companies and their subsidiaries. That was discussed in Committee, and I am pleased that the Minister has had time to reflect and table an amendment.
	There have been some significant improvements in this part of the Bill since the Committee stage, and I welcome what the Government have done. We have a limited opportunity to provide for some broad equivalents in the context of trade unions, but a fuller and more formal debate may be required for that purpose.

Margaret Hodge: The hon. Member for Hornchurch (James Brokenshire) referred to the use of political funds by trade unions and the ability to switch money around, and asked about the transfer of money between general and political funds. That is not possible. I did not understand his point about the difference between direct and indirect contributions to the political fund, given that there is no possibility to transfer money between the two. That was basically my answer to his first question, but I would be happy to listen further if the hon. Gentleman wants to expand.

James Brokenshire: My point was about new clause 83(1), which includes the words
	other than a contribution to the union's political fund.
	It may be a legal expression, but I am seeking to clarify what happens according to whether the contribution is direct or indirect. The Minister may want to take further advice. I am raising a technical point, on which I would like some clarification. I accept that we may not obtain it this evening, but any further assistance would be helpful.

Margaret Hodge: The advice that I am getting is what I thought myselfthat there cannot be an indirect donation.
	The point about trade union ballots on political funds was inappropriate in this context. I was very careful earlier not to raise an issue that would have been far more relevant to this evening's debateConstituency Campaigning Services, of Coleshill Manor, an organisation that appears to act as a Tory party front in the west midlands. Some say that the company is separate from the Conservative party, but the current Conservative leader believes that it is directly linked. Anyone who delves into the organisation can see that it is very closely linked. In debating the provisions on political donations, it would have been more appropriate for the hon. Member for Hornchurch to have reflected on whether there was proper transparency in respect of Conservative party funding, rather than head-banging and having another go at the link between the Labour party and the trade unions, of which we are extremely proud.
	We had a long debate in Committee on lobbying, and I think that the hon. Member for Cambridge (David Howarth) and I simply differ. I disagree with him on his definition of political lobbying, because lobbying in the interests of a company on an issue that may, in future, be decided by politicians is a very different matter from other types of lobbying. Such lobbying is utterly legitimate and utterly invaluable to any member of the Government and in no way should we attempt to intervene. I said in Committee and I say again that my decisions as a Minister are much better informed when I have listened to all the interest groupsas indeed we have in the process of devising the Bill's clausesthan they would be if I took advice only from my civil servants, for whom I have huge regard for their endless work on the Bill, but who nevertheless come with the limited view of working within the civil service. I believe that we have to accept that situation.
	The hon. Gentleman made a wholly proper point, which I accept, about it being much easier for richer individuals and richer companies to lobby, but I am not sure that there is an easy answer to it. No doubt the hon. Gentleman would deal with the problem by finding mechanisms for equalising the voice of people in what I referred to in Committee as the political marketplace of interests. I believe that trade associations and other such organisations are hugely important in giving voice to smaller, less endowed companies.
	In the end, we have to have faith in our own judgment that we can make an objective appraisal after lobbying from all sides. Indeed, we spent quite a lot of time this afternoon debating issues surrounding narrative reporting, about which we have been massively lobbied by business interests with differing views on a range of matters concerned with the environment and corporate social responsibility. In the end, we have to reach a balanced view and make a judgment on it. I am sorry that the hon. Gentleman and I disagree. We have already had the debate twice and no doubt we will have it again, but I believe that lobbying has a very important part to play in a vibrant, good democratic structure. We should look into ways of increasing the voice of people less able to fund that themselves, and we should nurture and value lobbying generally.
	We have considered amendment No. 687 carefully and whether the drafting change to clause 372 that the hon. Gentleman proposes would make the meaning of the clause clearer. That is an issue for the lawyers and they have concluded that it would not. Subsection (3) clearly states that a resolution of members of a wholly owned subsidiary is not required, but a resolution of the members of its holding company is. I am, however, grateful to the hon. Gentleman for making the suggestion and lawyers will no doubt continue arguing about it.
	I forgot to move amendment No. 647 at the beginning of my remarks and it would remove

Mr. Deputy Speaker: Order. The right hon. Lady does not have to move the amendment. We will come to it in the course of our proceedings. She moves only the lead item in the group.

Margaret Hodge: With that helpful advice, Mr. Deputy Speaker, I draw my remarks on this group of new clauses and amendments to an end.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.
	 Question, That new clauses 82 and 83 be brought up, read the First and Second time, and added to the Bill,  put and agreed to.

New clause 76
	  
	Expenditure on lobbying

'(1) A company must not in any financial year incur expenditure on lobbying activity in excess of the limit then in force, unless the expenditure has been authorised by a resolution of the members of the company.
	(2) The provisions of sections 372(2) to (5), 372(6)(b), 372(7), 373(1), 373(2), 373(4), 373(6), 373(7), 374 and 375 to 379 shall apply to a resolution under this section.
	(3) The Secretary of State shall have power to make regulations, which shall be subject to the affirmative resolution procedure, to
	(a) set the limit, and
	(b) exempt, to any extent the Secretary of State sees fit, expenditure incurred by companies in responding to requests for information initiated by governmental or parliamentary bodies,
	but if the Secretary of State fails to set the limit, the limit shall be 1,000.
	(4) Companies must report expenditure on lobbying activity in excess of the limit in a form to be specified by the Secretary of State by regulations, which shall be subject to the affirmative resolution procedure.
	(5) Failure to comply with reporting requirements established under subsection (4) shall count as a violation of the duty to keep accounting records under section 392 and shall be punishable in accordance with section 393.
	(6) This section applies to overseas companies, as defined in section 1011, as well as to UK companies, and the powers of the Secretary of State in Part 34 shall be deemed to include a power to require overseas companies to report their expenditure on lobbying activity in excess of the limit.
	(7) Lobbying activity means any activity intended directly or indirectly to influence legislation or policy at any level of government in the United Kingdom.'. [David Howarth.]
	 Brought up, and read the First time.
	 Motion made, and Question put, That the clause be read a Second time:
	 The House divided: Ayes 50, Noes 291.

Question accordingly negatived.
	 Question, That amendments Nos. 495 to 497, 706, 499, 647, 500, 501, 707, 503, 708 to 711 be made and that new clause 9 be brought up, read the First and Second time, and added to the Bill,  put and agreed to.

New Clause 13
	  
	Saving for provisions of articles as to determination of entitlement to vote

'Nothing in this Chapter affects
	(a) any provision of a company's articles
	(i) requiring an objection to a person's entitlement to vote on a resolution to be made in accordance with the articles, and
	(ii) for the determination of any such objection to be final and conclusive, or
	(b) the grounds on which such a determination may be questioned in legal proceedings.'. [Margaret Hodge.]
	 Brought up, and read the First time.

Margaret Hodge: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 14 Computation of periods of notice etc: clear day rule.
	Government amendment No. 643
	Amendment No. 682, in clause 291, page 137, line 1, at end insert
	'(3A) Directors of the company shall be ineligible to cast any proxy votes.'.
	Government amendment No. 301
	Amendment No. 355, in clause 307, page 142, line 23 , at end insert
	'( ) Nothing in this Chapter affects a provision of a company's articles which provides for a resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting, or at a meeting of any class of members of the company, at which he was present (whether such resolution consists of one instrument executed by or on behalf of each such member or of several instruments in the like form each executed by or on behalf of one or more such members) to be as effectual as if it had been passed at a general meeting, or at a meeting of any class of members of the company, duly convened and held. A resolution in writing passed in accordance with such a provision of the company's articles shall be treated as if it were a written resolution for the purposes of this Chapter.'.
	Government amendments Nos. 443, 302, 348 and 349.
	Amendment No. 418, in clause 316, page 146, line 2, at end insert 'and
	(d) be communicated directly to the member either in electronic form or in hard copy form'.
	Government amendment No. 444
	Amendment No. 419, in clause 327, page 149, line 30 , at end insert
	'(1A) The chairman must demand a poll when he is aware that the outcome would be different from that reached on a show of hands.'.
	Amendment No. 420, in page 149, line 30, at end insert
	'(1A) The chairman must announce the number of proxy votes in favour and against each resolution, before such a resolution is put to a vote of members in general meeting.'.
	Government amendment No. 445
	Amendment No. 421, in page 158, line 13, leave out Clauses 349 to 352.
	Government amendments Nos. 446 and 350.

Margaret Hodge: Despite the number of Government amendments and new clauses, I can assure you that I will be brief, Mr. Deputy Speaker. These are all designed to help to improve the operation of the resolutions and meetings provisions in part 14 and related provisions. I will take Members through some of the key points.
	Government new clause 13 and Government amendment No. 301 respond to concerns raised by the hon. Member for Hornchurch (James Brokenshire) in Committee about the admissibility of votes. Clause 294 is replaced with a new clause to preserve the right of a company to require objections to votes to be made in accordance with procedures in the articles. We took the point that the old clause was too ambitious so we are just preserving the current law. If an objection is overruled, the decision will be final, except in the case of fraud and certain other kinds of misconduct detailed in case law, where a court may intervene.
	New clause 14 is intended to ensure clarity and consistency in the calculation of time periods in relation to meetings and resolutions. That was also an issue raised by the hon. Gentleman in Committee. His point related to whether, in calculating periods of notice, the date of the notice and the date of the meeting are supposed to be excluded.
	Government amendment No. 643 to clause 288 and Government amendments Nos. 644 to 650 ensure that when a resolution is required, but the type of resolution is not specified, the default will be an ordinary resolution unless the articles require a higher majority. When a provision specifies that an ordinary resolution is required, the articles will not be able to specify a higher majority. That will be the case when, for example, we do not want the will of a simple majority to be frustrated by a blocking minority.

Jonathan Djanogly: As the Minister implied, we are considering something of a hotch-potch of new provisions to finish off the day. Just in case we end up with a problem with time, I shall start by speaking to amendment No. 355, which we believe to be the most important element of the group.
	Amendment No. 355 originated from the Law Society. It would enable a company to make provision in its articles on the passing of unanimous written resolutions that were not subject to the procedures laid down in chapter 2 of part 14. The provisions in chapter 2 are less flexible than those in section 381C of the Companies Act 1985, which permits a company's articles to make provision for written resolutions to be passed pursuant to the articles as an alternative to following the statutory procedure. The amendment would preserve that flexibility when the written resolution is agreed unanimously by members. That reflects a principle of common law, as expounded in the case of re Duomatic, 1969, which hon. Members will remember was mentioned in Committee.
	Such flexibility was incorporated in clause D18 in the White Paper of March 2005. Subsection (2) provided:
	This section does not affect any power of a company to make provision in its articles for its members to pass resolutions without a meeting other than in accordance with this Chapter.
	We think that the flexibility needs to be retained, but only for written resolutions that are passed unanimously. We do not consider that clause 288(3) achieves that flexibility.
	Such flexibility is needed for not only private companies, but public companies that cannot avail themselves of the statutory written resolution procedure that exists in the Bill. It is not uncommon for newly incorporated public companies to pass written resolutions pursuant to a provision of their articles, and if that ceased to be possible it would create extra work and cost.
	Two examples come to mind in relation to the provision. First, following the formation of a public company, it is common to adopt new articles. That can be done by a written resolution pursuant to regulation 53 of table A when that is incorporated in the articles of a company on its formation. Secondly, when a public company is a wholly owned subsidiary of another company, it is common to pass written resolutions in accordance with the outcomes. However, the Bill does not allow that practice to continue. The consequence will be that a resolution of a public company will require a meeting of members in all circumstances. That would involve additional expense, but it would give no benefit in the circumstances that I have mentioned.
	We welcome Government amendment No. 301 and new clause 13. We tabled amendments to clause 294 in Committee and my hon. Friend the Member for Hornchurch (James Brokenshire) expressed his justifiable concerns about the effect of the clause as drafted. It allowed that if a person was not entitled to vote, but did so, and if the articles of association of that company provided a mechanism for objecting to an improper vote, and if an objection was made and rejected, or if no objection was made in the relevant time period, the unauthorised voter would be deemed to have been entitled to vote. My hon. Friend stated that that would unfairly prejudice shareholders who could not challenge a decision that was irrational, unreasonable or even unlawful. The Government amendments return us to the existing common-law position. If the result of a poll is declared, a court should now be able to question it, rather than having no power to change it. That is sensible and to be welcomed.
	New clause 14 is the Government's welcome response to amendments that we tabled in Committee. Currently, companies insert into their articles a provision that when giving a notice period for meetings, no account will be taken of the day of sending of the notice, or the following day, or the date of the meeting itself. However, that can be drafted as two extra days or three extra days, which can cause confusion. In the worst instances, circulars have been sent out illegally to members, causing great embarrassment to all concerned. The point might be slightly technical and one that only practitioners and company secretaries will be happy to see made, but we thank the Government for reconsidering that grey area, which we highlighted, tabling new clause 14 and thus providing clarity to all concerned.
	In amendment No. 682, the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) suggests that directors should be ineligible to cast proxy votes. I would look forward to hearing his reasons were he here to state them, but he is not. However, most proxy forms give power of proxy to the chairman or such other person as the shareholder nominates. No one is forcing shareholders to support the chairman in order to cast their vote; it is simply convenient for many shareholders. For that reason, we cannot support the amendment. The amendment stands in the name of the hon. Member for Great Grimsby (Mr. Mitchell) as well, so perhaps he will speak to it in due course.
	Amendments Nos. 348 and 349 would reserve the original position in the Bill, such that an AGM of a public company will be capable of being called on short notice where all shareholders consent. That will make public company AGMsmainly where there is a handful of shareholdersprovide the formality that shareholders normally require. It is a deregulatory measure and, as such, we support it.
	The purpose of amendment No. 418 is to clarify how a company should notify its members of the publication on a website of the notice of the meeting. Clause 316 makes provision in that respect, and subsection (2) states that the company has a duty to notify its members of the existence of the notice on its website, but it is not made clear how such notification is to be given. We agree with the Law Society that it is important that companies notify their members directly when they have published a notice. How that should be effected requires clarification. We would be concerned if it was sufficient merely to put the notice of the meeting on the website.
	Amendment No. 419 is a probing amendment that we received from the Investment Management Association. In a previous debate, it was said that now is not the time to be proposing probing amendments, but I am sure that the Minister will forgive us on this occasion, given the nature of the Bill and the way in which everything seems to be crammed in at the last minute.
	Under regulation 46 of table A to the Companies (Tables A to F) Regulations 1985, a resolution voted on at a company meeting is decided on a show of handsone vote per member for each shareholder actually present or represented in the case or a corporate shareholder, but not proxies unless the articles so provideunless a poll is called. Common law clarified the chairman's duty to
	ascertain the true sense of the meeting.
	If the chairman as proxy is aware that if a poll was called the outcome would be different from that reached on a show of hands, he has a duty to demand a poll, if he is able to do so under the company's articles of association. Guidance from the Institute of Chartered Secretaries and Administrators re-emphasises that duty.
	We were therefore concerned to learn that at the AGM in July of GoshawK Insurance Holdings, the reinsurer, an advisory resolution on the remuneration of the chairman was decided on a show of hands when a poll would have defeated it. We understand that GoshawK's lawyers had advised that, because votes on remuneration are advisory and not binding on the companythat is certainly the case in relation to the combined codethe chairman was not obliged to call a poll. It is considered important by the Investment Management Association that the law in this area is clarified, and the Bill is an opportunity to do that. It would be helpful if the Minister set out the Government's position in that regard.
	Amendment No. 420 deals with the related issue of votes at general meetings. On the question whether a chairman should be forced to call a poll, transparency would be a key issue. To that end, the amendment suggests that the chairman announce the number of proxy votes before the resolution is put, rather than after the resolution is put, as is usually the case with listed companies. In that way, members will know to call a poll in the usual way. Such transparency would make the IMA amendment unnecessary. The provision may be more suited to the compliant code for listed companies, but I shall be interested to hear the Minister's views and whether she will look into the matter in more detail.
	Finally, on amendment No. 421, which would remove clauses 349 to 352, the CBI's updated view is rather blunt. It believes that the provisions dealing with independent reports on a poll are
	excessive and unnecessary and will place increased burdens and costs on companies
	and that they are
	contrary to the Government's aim for deregulation and the principles of better regulation.
	We debated the matter in Committee and it has been debated in another place. The Government have still not got the position right.
	The debate relates to clauses 349 and 350, which provide a mechanism for shareholders representing not less than 5 per cent. of the voting capital of a quoted company to demand an independent report on any poll taken or to be taken at a general meeting of the company. The request must be made no later than within one week of the poll being taken, and the directors must appoint an independent assessor within one week of the requirement to prepare a report for the company on the poll or polls.
	The Institute of Directors said of the arrangements:
	These provisions are onerous and unnecessary. The Government has provided no evidence of any abuse it is trying to redress. They will place increased costs and burdens on companies for no discernable gain. In addition, in spite of the statement that an adverse report on a poll will not affect the validity of a decision, it is likely that companies would delay the implementation of the decision until the time for a challenge has expired. In the case of decisions taken at EGMs this could have a seriously detrimental effect on companies' ability to complete major transactions and would undermine the competitiveness of UK companies.
	The procedure of calling for an independent report would be open to serious abuse from those who were opposed to a transaction, but knew that they would be defeated on a poll. They would hope to achieve their desired aim by the back door rather than through the legitimate democratic process of the poll.
	That was a quote from the IOD, and earlier I quoted the CBI, so there we have the views of a section of the business community. The provisions highlight some of the strong feelings that exist, and we believe that the Government could address those concerns in a more significant way than they have done to date.
	One of the points that has been raised is the impact of the delay. It has been pointed out to us that companies may seek to wait a week before implementing a change, for fear that a demand for some sort of report may be required. If that were the case, it would impose a considerable cost and burden on companies. In that regard, we could have a situation where companies are making a share offering and the longer that the share offering waits to be completed, the more the company may be required to pay in subscription costs or placement charges to agents or underwriters. That could increase the costs associated with companies' placement of new shares, which is not desirable.
	Even if we do not take that point of view, there is another issue. What will be the sanction if a report is received that is unfavourable and says that something has not been done appropriately? As we have already discussed, the chairman's ruling in relation to a particular matter is fairly conclusive, in much the same way as Mr. Speaker's decision is conclusive. If a report is called for, there may be some further delay to enable it to be undertaken. If a report is called for after the general meeting has taken place, it may be difficult for the expert who has been appointed to provide the report to assess it and conclude whether matters were conducted appropriately.
	I have mentioned several issues in relation to these provisions and I would be grateful if the Minister addressed them.

Austin Mitchell: I was interested in the speech of the hon. Member for Huntingdon (Mr. Djanogly) because it is fairly typical of the Opposition's approach throughout the Bill, which is to trot behind the Government, nagging and niggling, trying to turn themselves into the political arm of the Law Societywhich is a powerful positionbut not answering the crucial question, which is: do the Opposition feel so strongly that they will push any of the matters to a vote? That is what everybody has been waiting to hear and what the hon. Gentleman failed to tell us. We will not have such a clear answer from the Liberals, because they will be saying that they will vote for it and against it, in their usual way.
	As the only author of an amendment that is at all controversial in this group of amendments, amendment No. 682, I felt that I should reply to some of the aspersions that the hon. Gentleman cast on it to give some substance to his speech. This is an issue of shareholder democracy. There are three ways of managing and regulating corporations and bringing them under some degree of accountability so that they fulfil the corporate purposes that we would like. One is openness in reporting, which we have argued for in previous amendments. The second is effective regulation of the kind that the Securities and Exchange Commission offers in the United States, and which we should offer here, and for which I will continue, as will my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), to push. The third is shareholder democracy.
	The main weakness of shareholder democracy, which we all want to encourage, is essentially that it is vetoed by the enormous power of the directors in casting proxy votes, because that puts the directors in a position of intolerable power. It is a steamroller driving over and crushing shareholder democracy. The enormous power of the proxy is used to suppress discontent; to force through higher rewards for the people at the top of the companythe increasing shower of money that is falling on them; and to prevent the shareholders asserting any power in the company, where, even when things are going wrong, it is very difficult for the shareholders to do anything about it.
	Why should we accept the fact that directors should have the power of the proxy, which they can mobilise, when it is difficult for shareholders to mobilise against them? Why not simply do as our amendment says, and that is proscribe the power of holding proxy votes that is held by the directors at present? Stop them using proxy votes. Give the shareholders a real voice; a real alternative. That is the purpose of the amendment.

Margaret Hodge: Amendment No. 355 raises a difficult point that we have considered in correspondence with the Law Society, as hon. Members know. The procedure for written resolutions in the Bill is very different from that of the 1985 Act. Unanimity is no longer required. This is a very significant measure of deregulation. However, because unanimity is not required, certain procedural safeguards are not needed in the context of unanimous procedures. The argument behind the amendment is that companies with written resolution procedures in their articles, whether public or private, should be able to evade those procedural requirements, if the articles require unanimity.
	That is superficially attractive, but we believe that it is wrong in principle. First, for a number of resolutions in the Bill, there is a particular procedure to be followed, and we do not want those procedures to be avoided because of provisions that companies may have in their articles. Secondly, for public companies certain decisions need to be taken in a meeting rather than by written resolution, because of the second company law directive. In essence, the amendment is about avoiding statutory procedural requirements, but we do not think that the procedural requirements imposed by the written resolution clauses are onerous. There is nothing in the Bill that stops non-statutory resolutions from being passed in whatever way the articles envisage. If the articles require members' agreement, there is no need to comply with the statutory procedures.
	My hon. Friend the Member for Great Grimsby has discussed amendment No. 682. I hope that he has picked up that the Bill includes a range of clauses to strengthen shareholder engagement. Indeed, I expect that we will debate institutional shareholder voting tomorrow. However, amendment No. 682 is not right, because it would prevent a director from acting as a proxy. In an ideal world, we might wish that all shareholders would attend general meetings, but that will not always happen. If shareholders want to appoint somebody in their stead, be it a director to act as a proxy or be it somebody else, they should be free to appoint somebody to represent them and to vote on their behalf. It is better for them to have a say in a particular thing rather than not including that power in the Bill. My hon. Friend's amendment would make it more difficult for members to exercise their votes.

John Gummer: Would it not be extremely damaging if that amendment were to get through? It would mean that even if people are perfectly happy with how a company is being run, a very small number of people who decide arbitrarily to turn up at a meeting might make decisions, which would be very serious for other members of the company, who would not have the means to ensure that their voice was heard.

Margaret Hodge: I do not take that point, because any system would try to ensure that every shareholder has the right to engage in deliberations around resolutions that a company might take. Indirect shareholders, who may hold shares through pension funds or mechanisms such as personal equity plans, should have those rights, which is a point addressed elsewhere in the Bill. The extent to which their views will influence the ultimate decision of the company depends on the extent of their shareholding. We want to extend shareholder engagement, and it is important to do so through indirect shareholder engagement, particularly because more than half of shares are held indirectly.
	The hon. Member for Hornchurch (James Brokenshire) first raised amendment No. 418 in Committee, and it would remove an element of flexibility for no good reason. We discussed whether notice could be given by phone rather than in writing, although I accept the point made by Conservative Members that notice needs to be provided to members of a resolution being tabled or of a meeting being held. We have taken that point, but the issue is flexibility.

Jonathan Djanogly: I thank the Minister for taking the point, but how does she intend to deal with it?

Margaret Hodge: As we have in the Bill, not as phrased in the amendment.
	Amendments Nos. 419, 420 and 421 would put us in an odd position. Amendments Nos. 419 and 420 suggest that we are against regulation and legislation while the Conservatives are for it, whereas amendment No. 421 suggests that we are for it and they are against it. That shows the oddity of political decision making. We do not think it necessary to legislate in the way that the hon. Gentleman suggests. However, I am happy to ensure that his views about the combined code on corporate governance go to the Financial Reporting Council, which is responsible for ensuring that the code is in place.
	Amendment No. 421 is the Opposition's fifth attempt to remove the provisions giving members the power to require an independent report on a poll. Let me address the key objections that Conservative Members have expressed before. I hope that they will, at this eleventh hour, accept what I say, which is still valid. First, they express concern about the impact of a delay between the meeting and the completion of the independent report on the poll. In my view, that is overstated. The report is not intended to delay company action arising from the meeting. It cannot in itself undo resolutions passed or rejected at a meetingits purpose is to satisfy shareholders about the accuracy and integrity of the polling process.
	Secondly, Conservative Members question the sanction that the company could suffer if the report is unfavourable. The provisions are intended to deliver the greater transparency that my hon. Friend the Member for Great Grimsby seeks and to enhance shareholder engagement. The facility to challenge and to have an independent report provides a vehicle for openness. It allows shareholders to expose any problem in the company's voting processes. It is not entirely fail-safe, but this level of accountability to shareholders should ensure proper practice in the exercise of polls.
	Thirdly, Conservative Members raise the regulatory and cost burdens. The provisions are entirely consistent with our deregulation and better regulation agenda. They empower shareholders with an additional tool by which to hold directors to account. The provisions apply only to quoted companiesaround 1,300 or 1,400 in all. Shareholders of companies with good, transparent voting processes in place are less likely to ask for independent reports.

Jonathan Djanogly: Has the Minister had any indication that these provisions will be used? Has anyone requested them?

Margaret Hodge: If they are not used, the objection to them will never become reality, but they remain a tool that could be used. The hon. Gentleman should accept the existence of this mechanism, which will ensure that the conduct of directors in pursuing issues is above board and in order. If it is not, shareholders can employ the mechanism, should they so desire, to ensure that they are properly dealt with. We have put this measure in place to ensure much better shareholder engagement in the processes of a company undertaking its business. I am rather surprised that Conservative Members feel that they have to come back to this time and again and at the final hurdle say, Actually, we do not think this provision is going to be used at all, so why are you putting it into the Bill? That is a rather weak argument against a measure that will ensure that shareholders have the rights that we wish them to have in engaging in a proper way. If those rights are ever challenged, they can take advantage of the provisions in this part of the Bill. I ask hon. Members to reject amendment No. 421.
	The Government new clauses and amendments would deliver greater transparency, enhance shareholder engagement and ensure the realisation of the corporate governance objectives that we all support. If we want to encourage more shareholders to exercise their vote, we need to empower them with the necessary tools so that their vote counts.
	I therefore urge hon. Members to accept the Government new clauses and amendments and reject the others.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.
	 It being Seven o'clock, Mr. Speaker,  put forthwith the Questions necessary for the disposal of business to be concluded at that hour, pursuant to Order [17 October].
	 Question, That new clause 14 be brought up, read the First and Second time, and added to the Bill, and that Government amendments Nos. 643 and 301 be made,  put and agreed to.
	 Amendment proposed: No. 355, in clause 307, page 142, line 23 , at end insert
	'( ) Nothing in this Chapter affects a provision of a company's articles which provides for a resolution in writing executed by or on behalf of each member who would have been entitled to vote upon it if it had been proposed at a general meeting, or at a meeting of any class of members of the company, at which he was present (whether such resolution consists of one instrument executed by or on behalf of each such member or of several instruments in the like form each executed by or on behalf of one or more such members) to be as effectual as if it had been passed at a general meeting, or at a meeting of any class of members of the company, duly convened and held. A resolution in writing passed in accordance with such a provision of the company's articles shall be treated as if it were a written resolution for the purposes of this Chapter.'. [Mr. Djanogly.]

Question put, That the amendment be made:
	 The House divided: Ayes 203, Noes 288.

Question accordingly negatived.
	 Question, That Government amendments Nos. 443, 302, 348, 349, 444 to 446, 350 and 269 be made, put and agreed to.
	 Bill, as amended in the Standing Committee, to be further considered tomorrow.

Mr. Speaker: Will hon. Members please leave the Chamber quietly?

PETITIONS

Off-road Bikes

Ian Stewart: I am pleased to have the opportunity to present a petition initiated by my constituent, Mrs. Maureen Dunleavy. My constituents do not want to stop the safe and legal riding of mini motos, but they want the dangerous and illegal riding of them to end. They do not want local residents to be at risk on pavements, or to be kept up late at night by the noise. They want the police to take firm action, using the powers that they already have, to curb the high-speed riders. I commend the petition of the people of Irlam and Cadishead, signed by more than 300 residents, to the House. It declares:
	The Petition of the people of Irlam and Cadishead,
	Declares that we, the undersigned, call for a change in the law whereby all off road bikes, including (mini motos, trial bikes, quad bikes, petrol scooters and go-peds) are registered with the DVLA and carry a visible licence plate.
	The Petitioners therefore request that the House of Commons urge the Home Secretary to register such vehicles and require them to carry a visible licence plate
	And the Petitions remain, etc.,
	 To lie upon the Table.

Post Office Card Account

Geoffrey Cox: I have the honour to present the petition of 6,222 of my constituents in Torridge and West Devon who fear that the withdrawal of the Post Office card account and the continuous erosion of the services that sub-post offices provide will destroy their viability as small businesses. They plead with the Government for an enlightened recognition of both their social value to rural communities and the compelling case to preserve them. The petition reads:
	That any decision not to renew the Government subsidy paid to the rural post office network and the withdrawal of the Post Office Card Account, when combined with the loss of other sources of revenue, may render the rural post office network unsustainable and force sub-post office branches to close.
	Wherefore your Petitioners pray that your honourable House shall urge the Government to recognise the importance of Post Offices to those living in rural communities, to reconsider its decision neither to continue with nor to replace the Post Office Card Account, to undertake to support and sustain the Rural Post Office Network and to prevent the further closure of sub post office branches.
	And your Petitioner(s), as in duty bound, will ever pray, c.
	 To lie upon the Table.

Philip Hollobone: I have the honour to submit a petition on behalf of Mr. Stan White and some 200 other customers of the Rothwell post office, some of whose customers, including the sub-postmaster, were in the Houses of Parliament earlier today.
	The petition declares:
	The Petitioners believe that the post office network provides a vital service to local communities in both urban and rural areas which are threatened by the Government's withdrawal of services from local post offices.
	The Petitioners therefore request that the House of Commons call on the Government to reverse its announcement that it will end support for the Post Office Card Account in 2010 thereby threatening the viability of thousands of post offices and urge the Government to immediately halt its activities designed to kill the account off in advance of that date.
	And the Petitioners remain, etc.
	 To lie upon the Table.

PEUGEOT (COVENTRY)

Motion made, and Question proposed, That this House do now adjourn. [Mr. Heppell.]

Jim Cunningham: I thank you, Mr. Speaker, for granting this Adjournment debate, which is not only appreciated by Labour Members but, I am sure, by the workers at Peugeot.
	This is the second Adjournment debate that we have had on this matter, as there are really two issues. There is the general issue of manufacturing in the west midlands, and I am sure that some of my colleagues know exactly what I am talking about. Not too long ago, there was the Rover issue. More locally, the Standard motor car company has been an issue over the years. Then we had problems with Jaguar about 18 months ago.
	Some months ago, we heard the announcement that Peugeot would close its plant next summer. Last week, however, it was announced that the plant will close in January. If we look at that company's record, we see that it has played ducks and drakes with the labour force and, to a certain extent, one could argue, with the Government at times. Over the past two years, I know that Ministers have had great difficulty in getting answers from the company about its long-term plans in relation to the Coventry plant in particular.
	There is therefore nothing new about the way in which the company does it business, but I thought that it was brutal, callous and, to say the least, totally insensitive to announce that the workers at Peugeot will lose their jobs just after Christmas. Someonenot me, but a former Prime Ministeronce said that that was one of the unacceptable faces of capitalism, which sums the position up adequately.
	I want to raise one or two issues. First, publicity has suggested that Peugeot originally bought the site for 1. Were any inducements or sweeteners used on that occasion? The Minister might not be able to answer that tonight, but I would be grateful if she looked into it. Secondly, what amount of grants, not just nationally but on a European level, have been paid to the company over the years? What conditions were attached to the grants? Those are important points.
	The reason the company has given for its recent announcement is that a quarter of the labour force have left. By that logic, three quarters remain who want to keep their jobs. We also know that it is a profitable company, so it is a strange logic.
	Another aspect of the company's argument that has changedagain, one cannot rely on anything it saysis that it had proposals for eastern Europe. We have now found out that it has cut back on those proposals. It has also announced redundancies in France and Spain. The evidence suggests that the company has been secretive over the past three or four years and, at worst, that it has played ducks and drakes with the labour force, not only in this country but in Europe.
	I want to thank my right hon. Friend the Minister for visiting Coventry some weeks ago. She discussed with us how we could start to replace some of the industries that we are losing, certainly in the Coventry area. I am sure that my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will agree that the meeting was useful. She banged heads together and got some movement on the new medical technological park that will be located at Ansty.
	We want to thank the Minister for something else. We made representations to her about employment, which, as I am sure she knows, is a complex issue, certainly in Coventry. We were very concerned about Jaguar, and about what would happen if assisted area status was withdrawn. The Whitley site employs 3,000 or 4,000 people, and there are proposals for further developments. We raised the issue of the Peugeot site itself, and also the way in which Rolls-Royce might be affected. I am pleased to say that we secured some positive movement, which many people, especially the trade unions, will appreciate.
	What is also appreciated is that, when the story broke, the Chancellor of the Exchequer offered us a quick meeting, along with the unions. The unions' problem at the time was that they could not persuade representatives of the company to sit down and talk about alternative proposals. As a result of the Chancellor's intervention we got talks going, although they did not work out in the way that we wanted.
	We have had major debates about the west midlands economy. There have been indications that Ministers are considering a new industrial strategy for the west midlands. As I said earlier, they are enthusiastic about the new medical and technological park. While on the one hand we are losing jobs, on the other there are some positive signs. Nevertheless, we see it as our job to put pressure on Ministers to ensure that manufacturing jobs start to be replaced. According to various reports, there is a drift to the service industries in the west midlands. We want to see a halt to that, and more of a balance.
	There are pockets of social deprivation in some parts of the west midlands. Not everything is rosy. Some good things are happening, but training and skills are needed to end that social deprivation. I know that the Government are investing in those. The west midlands is famous for research and development. The Chancellor has made extra money available, but we must keep up the momentum. The more research and development money we can put into the universities of the west midlands, the better.
	I am sure the Minister knows that we have taken a great interest in RAF Cosford. Welsh Members have been lobbying hard, but we think we have much more to offer in the west midlands. We have a number of first-class universities, and a good many skills. We want to retain those skills at Cosford and we also know that the creation of a further 2,000 or 3,000 manufacturing jobs is a possibility. All in all there are some positive signs, but we must not be complacent. We must continue to push as hard as we can.
	Thank you very much for granting me this debate, Mr. Speaker. I hope that the Minister will respond to the points I have made, some of which are very serious. I am sure that it will help those affected in Coventry if she can provide some answersalthough we cannot help them completely, because they will have a very bad Christmas: they are going to lose their jobs.

Geoffrey Robinson: I echo the thanks of my hon. Friend the Member for Coventry, South (Mr. Cunningham)whom we all congratulateto you, Mr. Speaker, for your kindness in granting us this debate. The presence of a good-sized group of distinguished hon. Friends from the region shows that, although the issue has been around for a long time, it is still of intense and topical interest to us all. We look forward to hearing from my right hon. Friend the Minister shortly. We are also pleased to see our hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien), the Solicitor-General, whoapart from his ministerial responsibilities in the Cabinetshares our local interest. As a Minister and as a Member of Parliament, he has always taken a particular interest in employment matters in the area.
	My hon. Friend the Member for Coventry, South dealt with the issue very fully. He described the company's behaviour as brutal, callous and insensitive, and I have to say that, unfortunately, that is how it is viewed by most employees at the plantor, at least, those who are still there.
	It is particularly apposite that the Minister is replying tonight, as she knows from her recent visits to Coventry some of the problems that we face, as well as some of the great opportunities that we are seeking to seize. In other words, we are not being negative about the matter, though there are important points about Peugeot to be made. As a city, an area and a region, we are seeking to forge ahead and it is appropriate to tell the Minister how well she has done in bringing a new impetus to the development of the Ansty site in Coventry.
	I wish to raise two specific points that arise from my what my hon. Friend the Member for Coventry, South said. First, there is the matter of the 5 million that the company alleges it has put into the relief of hardship cause after its decisiona decision that came out of the blue and contradicted many previous undertakings. The availability of the 5 million became one of the great hopes of people involved. I am not sure that the Minister can answer this eveningwhat she says will be transmitted to the company in any eventbut people need to know whether it is real money or whether it amounts just to the 20,000 man-hours claimed today to be at the disposal of employees by way of advice. If the latter, it is a scam and it is silly of the company to pretend in this way. It devalues its undertakings and, frankly, shows the company to be precisely what it is: insincere and unreal. It would have been far better not to have made the remark and not to have given the undertaking in the first place. We seek clarification on that point. It is not too late: the company could still make some contribution of real money, which would be appropriate in many deserving cases that could be identified.
	My second point relates to the sudden announcement that the closure date is being brought forward from July next year to December this year. The unfortunate incidence of the timing has already been highlighted. It seems to me to reflect once again the insensitivity of the company. Many trade unions and employees have told me that they made plans to stay until July next year on the very clear understanding that they had a firm, legally binding commitment from the company to continue their employment up to that date. I do not know the details, have not seen any paperwork and do not know what undertakingsverbal or otherwisewere given. The unfortunate employees, however, now feel that they have been treated unjustifiably, unfairly and contrary to every undertaking that the company had given. I cannot comment further, but I put those two specific points to the Minister and look forward to her transmitting them. If she cannot answer tonight, I hope that in due course the company will hear and reply.
	My last point is a more general one for the Minister to consider. In this age of global competition, a company can sometimes buy land or other assets in advantageous circumstances at a knock-down priceLongbridge is a good example in many waysor it can be given grants or inducements to take on a particular set of circumstances, as my hon. Friend the Member for Coventry, South mentioned. Well meaning though a company may be, those circumstances represent a concession in kind of a very considerable magnitude. There must be a system of clawback and I believe that there is such a system in respect of regional grants. I do not think that they have ever been employed, but the Government must toughen their whole stance. In an increasingly mobile world, in terms of employment and capital, the Government must be prepared to face up to these companies, tell them what the terms are and insist that they be respected. It must not be a one-way street.

Jeremy Wright: I congratulate the hon. Member for Coventry, South (Mr. Cunningham) on securing the debate and I thank both him and you, Mr. Speaker, for allowing me to contribute briefly to it. There is a broad measure of agreement on this. Points about Peugeot can be made on which I know MPs and councillors across the political spectrum feel very strongly. I hope that the Minister accepts that feeling on this matter is equally strong across the political spectrum.
	The reason is, as hon. Members have already said, that this company has cut the ground from under the work force in Peugeot not once or twice, but three times. It has done so, first, by indicating that the successor model to the Peugeot 206 would not be built at the Ryton plant; secondly, by announcing that the closure of the plant would take place in July 2007; and thirdly, as has been said, by bringing that date forward to January of next year. The company has obligations to its work force that it must honour, and, as the Minister may know, 450 members of the work force still do not have a job or further training to go on to. I hope that she will be able to put what pressure she can on Peugeot to honour those obligations.
	I have only one complaint about this Adjournment debate. Its title is erroneous. The Peugeot plant that we are discussing is not in Coventry, but in Warwickshire and in my constituency. I do not make that point purely for the sake of geographical accuracy. I accept that the hon. Gentlemen who have spoken and the other Members in the Chamber have a legitimate constituency interest in what is happening, but I raise the point because the Government and the Minister are also engaged in a review of assisted area status. Warwickshire is unlikely to receive assisted area status under the new regime, and that will present a particular problem when the 143-acre site that constitutes the Ryton factory ceases to be a Peugeot plant. At that point, it will need assisted area status more than ever. I hope that she will consider whether there are ways by which we can bring the benefits of such status to the Ryton site as and when it will need it.

Margaret Hodge: I join others in congratulating my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate. He is a real battler for the workers in Coventry and he has always fought hard on the issues affecting Jaguar and Peugeot. I also congratulate him on that.
	I congratulate other hon. Members from that area, two of whom are next to me on the Front Benchmy right hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) and my hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien)and both have worked hard on the issue, as have my hon. Friend the Member for Coventry, North-West (Mr. Robinson) and the hon. Member for Rugby and Kenilworth (Jeremy Wright) who have also taken part in the debate and pursue an interest in the subject.
	I want to deal with the issues that have been raised and then say something about the general situation. My hon. Friend the Member for Coventry, South asked how the site was acquired, and I am assured by my officials that there was no incentive or sweetener from Government. What happens to the site now is therefore a matter for the company, but I hope that it will work closely with the regional development agency, Advantage West Midlands, local councils and with us to ensure that we bring good employment back to the area.
	My hon. Friend also asked what grants Peugeot had received. He will knowI have told him beforethat we offered 14.4 million to develop the new 207, but that project did not proceed. There was a grant about five years ago to support the introduction of an additional shift when demand for the 206 was at its peak and Peugeot has also participated in a number of research and development projects that have received grants from Government. However, it has not received grant funding directly provided to other partners in a joint project.
	My hon. Friend the Member for Coventry, North-WestI have to get the names of these Coventry constituencies rightasked whether the 5 million was real money. We have discussed that point with Peugeot and the company has given us a firm assurance and commitment that the 5 million is real money and that it has gone into funding the resource centre. It has also said to us that it will allocate more money if that is required for the resource centre.

Geoffrey Robinson: May we press my right hon. Friendand if not her, the companyon what it means by 5 million for the resource centre? Is it for bricks and mortar, equipment or grants? What is it exactly? What, in addition to the 20,000 man hours of advice that it has distributed and that it has made great play of today, does that money represent?

Margaret Hodge: I know that these issues have given rise to a lot of suspicion locally, and to reassure my hon. Friend and others I shall write to him, so that the company's assurances are in black and white.
	My hon. Friend the Member for Coventry, North-West also asked whether the Government recoup grants. As a former Minister, he will know that conditions always accompany such grants and that they have to be met. Usually, the criteria relate, for example, to the meeting of employment targets over a given period. If the targets are not met, we can then recoup the money.
	The loss of Peugeot is a disaster for those affected, and I do not in any way wish to mitigate that. As the hon. Member for Rugby and Kenilworth said, there are 450 workers and their families for whom we must all work hard to try to secure alternative employment, or training that could lead to other jobs. But I also want to express optimism, because there are good things happening in the car industry and manufacturing in the west midlands. I deliberately chose the west midlands as the first area to visit on my tour of the regions because of my interest in, and commitment to, the manufacturing sector, and because manufacturing is so important to that region. It is the largest sector and employer in the west midlands and it still constitutes 23 per cent. of gross value added in the area. So it is important, and we need to build on it through investment in innovation and research and development, as my hon. Friend the Member for Coventry, South said, using all the levers that we have to ensure the continuation of a strong and modern manufacturing sector.

Jeremy Wright: I am very grateful to the Minister for giving way and I accept that she is as keen as I am to bring back manufacturing jobs to the area, and preferably to the site in question. She will accept that all those involved want Ryton to be a productive site in terms of employment. But on the question of assisted area status, which I raised earlier, is there any way in which she can help those trying to market the site to make it more attractive as an employment opportunity?

Margaret Hodge: The hon. Gentleman has got it wrong, because assisted area status is only one lever. One reason the area could not be considered for such status was the improvement in gross domestic product and the reduction in unemployment that it has enjoyed. However, and as I have said to the many Members who have expressed concern about the loss of assisted area status, in the round, such status provided about 200 million-worth of investment last year, and it provides eligibility for investment and state aid. Last year, the regional development agency spent some 2.2 billion to 2.3 billion. So this Government are choosing to invest a lot of resourceswe go not for tax cuts, but for real investment in jobs and people. A lot of money is available and I hope that Advantage West Midlands, working with local MPs and with us, can put it to good use in the area and bring back that site.
	One reason I visited the west midlands was to address the issues faced by another sitethe old Marconi site, which has been mothballed for far too long. I wanted to ensure that we can work through the planning difficulties and those arising from the involvement of many different authorities, so that we can release the site and enable it to become productive and to provide jobs and manufacturing input.

Khalid Mahmood: I thank my right hon. Friend for giving way, for dealing with manufacturing issues in the west midlands, and for recognising how key manufacturing is to our vital industries and the huge knowledge base that we possess. In order to continue to develop the different types of manufacturing, will she form a task force involving all the regional partners, including the trade unions? Given that her Parliamentary Private Secretary, my hon. Friend the Member for Burnley (Kitty Ussher), is, like me, a member of Amicus, I am sure that my right hon. Friend will continue to work with the trade unions.

Margaret Hodge: We will certainly make every effort that we can, working through the existing task force. During my time in the west midlands I visited my hon. Friend's constituency and opened Morsons, which is a new specialist aerospace engineering consultancy that will provide 200 high-quality engineering jobs.
	BMW will make the engine for the Mini at Hamms Hall, in the constituency of the Solicitor-General. That is 250 jobs. When I was up in the west midlands, I announced the opening of a new nanotechnology centre, which will also make an important contribution to the area.
	I feel optimistic about manufacturing. We have to get the policies right, make sure that we improve our productivity, and invest in research, development and innovation. We have to build on the strengths of the west midlands, which is at the heart of manufacturing industry. I also feel optimistic about the automotive industry. It gets such an undeserved bad press. We are producing more cars in the UK today than at any time through the '80s. One has to look back to the '70s. Production is about 1.6 million.  [ Interruption. ] Sorry, I meant 1.6 million cars, not pounds.
	A couple of weeks ago, the Chancellor launched the new Mini, which will have a British-made engine. The new Nissan is not only made in Britain, but designed and developed here too. Sales of the new Civic are so strong that Honda has announced a major expansion in Swindon, which will create 700 jobs. There are 2,600 companies active in the automotive components sector. They contribute 4.8 billion added value and employ 132,000 people. I have just come back from a tour to Japan, Korea and China. I talked to people at the Japanese car companies and they see the UK as the place of choice in which to invest to create cars for the European market. Our job is to encourage them to continue to do that.
	Of course, we regret the closure at Ryton and we wish that it had never happened. It is true that, as my hon. Friend the Member for Coventry, South said, Peugeot is cutting jobs across the whole of its business: 2,300 in the UK, but 7,200 in France and 400 in Madrid. It did bring forward the closureit kept us closely involvedin part because more people were choosing to leave earlier and production became more difficult. We have to look forward and work to ensure that all those without a job find one.
	I have already heard a lot of good stories involving people who have found alternative employment. Chris Parker, who is 48, has found alternative employment within PSA Peugeot Citroen. That is an internal redeployment. A number of people are now working at Cummins, for example. I know that it is 30 or 40 miles away, but it is a good company that provides good industrial jobs. Danny Evans, aged 31, who had been with Peugeot for seven years, has moved there. Peter Millington, aged 46, who had been with Peugeot for 16 years, has also moved there.
	There are 6,000 vacancies notified to the resource centre. I looked through the list and the quality of those job opportunities is striking. The list includes vacancies at BMW, Unipart, Perkins, and Hutchinson Ports. There are more than 100 vacancies at other PSA operations in the Coventry area, including at a new headquarters building in the Stoke area. The list also includes some vacancies in Dagenham, which everybody is welcome to. The engine centre is expanding its work.
	I congratulate hon. Members and I will work with them and other stakeholders in the area to ensure that we put in place strong, continuing modern manufacturing that is sustainable over the longer term. I do not in any way underestimate the impactthe damagethat closures of this nature have not just on the work force, but on the local economy. We have worked closely with Peugeot and with the local partnership, which I commend, through the resource centre so that we can provide a quick response to support those who are affected. We will continue to work with the partnership to help all workers who require assistance in finding employment and we will continue to work with Peugeot and others as they develop their remaining business activities in the UK.
	 The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Speaker  adjourned the House without Question put, pursuant to the Standing Order.
	 Adjourned at ten minutes to Eight o'clock.